Gold hits record $2,600 amid U.S. rate cuts, Middle East tensions

Gold surged to a record US$2,600 on Friday, driven by expectations of further U.S. interest rate cuts and rising geopolitical tensions in the Middle East.

According to Mining.com, accessed by Zambia Monitor on Saturday, spot gold rose 1.3 percent to $2,620.63 per ounce by 1:43 p.m. ET (1743 GMT), while U.S. gold futures settled 1.2 percent higher at $2,646.20.

This latest rally was reportedly fueled by the Federal Reserve’s decision to initiate an aggressive easing cycle on Wednesday, which included a half-percentage-point rate cut.

The move boosted the appeal of gold, which offerred no interest but was considered a safe-haven asset during times of uncertainty.

Gold prices have risen 27 percent in 2024, marking the biggest annual increase since 2010.

Investors have flocked to gold as a hedge against the economic uncertainties caused by ongoing conflicts in the Middle East and elsewhere.

However, analysts caution that the record rally could face a correction.

Despite these concerns, some analysts predicted further gains for gold.

“Geopolitical risks, including conflicts in Gaza and Ukraine, will continue to sustain gold’s safe-haven demand,” said Forex.com analyst Fawad Razaqzada.

Additionally, the continued weakening of the U.S. dollar, which made gold cheaper for holders of other currencies, was providing further support for the precious metal.

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