The price of gold has increased by more than 21% this year, hitting a record high of $2,531.60 per ounce (oz) on 20 August.
Prices adjusted slightly downward on Tuesday but remained above the $2,500/oz level.
The price has been bolstered by continued investment optimism, planned US interest rate cuts and ongoing conflict in the Middle East.
The spot price of gold was relatively unchanged at $2,513/oz with the price of US gold futures declining by 0.3% to $2,548.20/oz.
A US interest rate cut has been planned for September, but debate is still ongoing as to its size. IG market strategist Yeap Jan Rong told Reuters that the potential size of the US rate cut has led to investors taking a ‘wait-and-see’ approach to gauge how the economic data influences decision making.
Mary Daly, San Francisco Federal Reserve President, said in a recent statement that a point cut of a quarter-percentage in borrowing costs is likely for September.
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By GlobalData
With low interest rates, the appeal in non-yielding bullion tends to increase.
Jan Rong explained he expects gold prices to increase further due to positive performances of the metal in past federal rate easing cycles and healthy demand for gold from the central bank.
Gold is considered a safe investment for investors because of its “intrinsic value”, which would theoretically remain valuable amid wars in Gaza and Ukraine, or in the event of another global financial crash or cyberattacks.
Tensions between Hezbollah and Israel have eased very slightly after ten months of continued conflict.
Gold prices often rise in times of geopolitical uncertainty, with investors seeing it as a hedge or safe haven. Soni Kumari, commodity strategist for ANZ, told US media outlets that gold prices can hit $2,550 levels in the mid-longer term, but the market could look for an opportunity to correct itself.
Over the same time frame, the spot prices of silver and palladium increased by 0.2% and 0.7%, respectively. The price of platinum fell by 0.7%.
