Gold futures notched another record high on Tuesday as the yellow metal continues to gain on the Federal Reserve cutting interest rates. Gold has been on a tear, finding support from various developments beyond monetary policy. While the precious metal appears to be overbought, some analysts think it could touch $2,700 before experiencing a pullback.
December gold futures surged $27.30, or 1.03%, to $2,679.80 per ounce at 18:20 GMT on Tuesday on the COMEX division of the New York Mercantile Exchange. Gold is up 5% this month and has rocketed 30% year-to-date. Over the last 12 months, the metal commodity has spiked nearly 39%.
Silver, the sister commodity to gold, soared $1.137, or 4.41%, to $32.455 per ounce. The white metal has risen about 9% in September and has advanced 35% so far this year.
The metals market has benefited greatly from the Fed shifting its stance on monetary policy. A couple of Fed officials, including Chicago Fed President Austan Goolsbee, suggest that further rate cuts were coming over the next year.
But it is not only the Eccles Building that has engaged in this easing. Other central banks, from the European Central Bank to the Bank of Canada to the People’s Bank of China, have slashed interest rates.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Geopolitical tensions have further fueled gold’s meteoric ascent. Gold prices have benefited from Israel striking Hezbollah targets in southern Lebanon, vowing to maintain these attacks. This, experts warn, could exacerbate tensions in the Middle East.
Meanwhile, the greenback weakened on Tuesday, adding to gold’s gains. The US Dollar Index (DXY), a metric of the buck against a basket of currencies, tumbled 0.36% to 100.48, from an opening of 100.97. The index is down 1% year-to-date.
A lower buck is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.
In other metal commodities, October copper futures rallied $0.1605, or 3.69%, to $4.507 per pound. October platinum futures climbed $26.00, or 2.7%, to $987.80 an ounce. October palladium futures surged $17.90, or 1.71%, to $1,063.00 per ounce.