Weak dollar, western investor buying drive gold prices to record high
Gold prices hit a record high on Tuesday as a weaker dollar and buying by Western investors extended the precious metal’s rally amid bets the US Federal Reserve will cut interest rates in September.
Spot gold rose 0.8 per cent to $2,524.88 per ounce by 1129 GMT, surpassing a previous record hit on Friday. London’s gold price benchmark hit an all-time high of $2,521.55 per ounce at a morning auction on Tuesday, the London Bullion Market Association (LBMA) said.
The dollar touched a seven-month low on Tuesday with traders bracing for comments from Federal Reserve Chair Jerome Powell on Friday. [FRX/]
“Gold is effectively trading in line with expected cross-asset correlations, albeit being driven more by the FX side rather than rates at the moment,” said Marcus Garvey, head of commodities strategy at Macquarie.
“From a flow perspective, it’s quite notable that it’s coming much more from Western investor buying than anything else,” he added.
The Chinese gold price arbitrage is weak with the Shanghai Futures Exchange price trading below the Comex price as high prices have muted demand in top gold consumer China in recent months.
