Gold hit a new record high Tuesday as U.S. investors grow more confident that federal policymakers will lower interest rates in September.
Gold hit $2,450.48 per ounce Tuesday morning, up $27.99, and it seems the yellow metal has even more room to run. The JM Gold Fear and Greed Index hit 88 today.
Gold’s previous all-time high was set on May 20, when it traded at $2,450.05 per ounce. It experienced a bumpier road in June as the prospect of rate cuts became less certain. But in the past two weeks, a series of economic data renewed hopes of a rate cut in September and maybe an additional reduction later this year.
Gold prices began their ascent earlier this month on a slew of economic data that showed a U.S. economy on shakier ground than many thought – including data showing that job creation among private employers slowed for a third straight month in June and, and an unexpected rise in the unemployment rate.
The precious metal was hobbled early last week after data that China halted gold purchases for a second straight month in June, but central bank demand from other countries helped absorb the blows.
Confidence in a September rate cut also began building last week during testimony by Federal Reserve Chairman Jerome Powell, who tossed out a few breadcrumbs of optimism when he told federal lawmakers the U.S. was making “considerable progress” in bringing inflation down to the Fed’s 2% target and that “the risks to achieving our employment and inflation goals are coming into better balance.”
Powell seemed to get even bolder on Monday when told the Economic Club in Washington that the central bank won’t wait until inflation hits 2% to cut interest rates.
“The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” Powell said.