Gold prices hit 6-week high today: Here we decode why
What's the story
Gold prices have surged to a six-week high, hitting $4,240.54 per ounce in early trading today. The rise is fueled by a weaker US dollar and cautious stock markets. Futures contracts for gold saw an increase, reflecting the trend in spot prices. Silver also saw a major spike, hitting an all-time high earlier today before settling at $57.48 per ounce.
Market dynamics
Market trends and Federal Reserve's potential rate cut
The rise in gold prices is partly due to falling S&P futures and a major drop in cryptocurrencies. Bitcoin fell 3.6% to $87,881.82 while Ether dropped 5% to $2,871.59. These market trends have led investors to expect a possible interest rate cut by the US Federal Reserve, with odds now at 87%. The CME outage last week also contributed to silver's spike by creating thin trading conditions.
Cost implications
Lower borrowing costs and their impact on precious metals
Lower borrowing costs usually benefit non-yielding assets like gold. The weaker US dollar is also making gold more attractive for holders of other currencies. Among other precious metals, platinum rose 1.3% to $1,694.70 while palladium jumped 2.1% to $1,482.45 in early trading today.