GOLD surpassed the 2,600 USD/oz markOANDA:XAUUSD increased sharply in the trading session on Friday (September 20), with spot gold prices officially surpassing the important barrier of 2,600 USD/oz for the first time in history. The possibility of the US Federal Reserve (Fed) continuing to cut interest rates and geopolitical tensions in the Middle East act as direct catalysts for this breakthrough in gold.
At closing, the spot price of gold in the New York market increased by 36.3 USD/oz, equivalent to an increase of 1.4%, closing at 2,622.4 USD/oz.
The Fed's move to lower interest rates by half a percentage point on Wednesday is "fueling" gold prices. This precious metal is a non-interest bearing asset, so it benefits in a falling interest rate environment.
According to data from CME's FedWatch Tool, interest rate futures traders are betting on a 100% chance the Fed will cut interest rates in both its November and December meetings.
In addition, this year, global investors are also actively buying gold to hedge against lingering geopolitical risks in the Middle East and some other places. The trend of net buying gold by central banks to diversify foreign exchange reserves away from the USD also contributed greatly to the increase in gold prices.
Israel announced that it had killed a senior commander and important figures of Hezbollah in an airstrike in Beirut, Lebanon, raising concerns about the risk of widespread war in the Middle East. However, US President Joe Biden still believes that the possibility of reaching a ceasefire agreement for the Gaza Strip is realistic.
Since the beginning of the year, gold prices have increased 26%, the largest increase in a year since 2010. Some analysts believe that this record increase in gold prices may soon turn into a correction state.
The Dollar Index, which measures the greenback's strength against a basket of six other major currencies, increased 0.12% on Friday, closing at 100.74 points. However, the index has decreased 0.37% this week and decreased nearly 4.8% in the past 3 months - according to data from MarketWatch.
