In a dramatic turn of events, gold has reached an all-time high of $2,567.93, fueled by a weakening dollar and growing speculation of a significant Federal Reserve interest rate cut. The dollar, on the other hand, has slumped against the yen, hitting a one-week low, as investors increasingly bet on a 50-basis point rate cut at the Fed’s upcoming meeting.
The sudden shift in sentiment comes after media reports suggested that the Fed’s decision on interest rates would be a close call, reigniting hopes of a more aggressive rate cut. This has led to a surge in gold prices, which extended Thursday’s 1.9% gain, and a decline in the dollar index, which measures the currency against six major rivals.
The yen has also benefited from the uncertainty, with hawkish comments from Bank of Japan officials supporting the currency. The euro, meanwhile, has built on Thursday’s gains, following European Central Bank President Christine Lagarde’s pushback against prospects of a rate cut in October.
Asian shares have also rallied, with Hong Kong’s Hang Seng leading the advances, gaining 1.13%. Mainland Chinese blue chips, Australia’s benchmark, and South Korea’s Kospi have also posted gains, as investors increasingly seek safe-haven assets amidst the uncertainty.
The tug-of-war between bond futures and the dollar-yen rate has left investors on edge, as they await the Fed’s decision. Will the central bank deliver a 25-basis point rate cut, or will it surprise markets with a more aggressive 50-basis point cut? One thing is certain – the next few days will be crucial in determining the direction of markets.
#Gold #Dollar #FedRateCut #Markets #Investing #Economy #InterestRates #FederalReserve #BankOfJapan #EuropeanCentralBank
