By Joe Hoppe


Gold futures reached a new all-time high in Asian trading as rate-cut hopes grow, U.S. Treasury yields fall and geopolitical tensions mount--and they look set to climb even higher.

August gold futures on the New York Mercantile Exchange recently rose 0.4% to $2,478.1 a troy ounce, having reached as high as $2,487.4 earlier in the session. The prior all-time record was $2,477 an ounce, set on May 20, before a sharp sell-off followed.

The new record follows several consecutive positive sessions, with bullion prices now up 6.3% on-month. U.S. Treasury yields have fallen to March lows, despite stronger-than-expected retail sales data published on Tuesday, SP Angel analysts said in a note.

As yields fall, precious metals are gaining momentum. With the Federal Reserve hinting at a likely U.S. interest rate cut and officials emphasizing progress on inflation, the market is now pricing in a guaranteed rate cut in September, SP Angel said.

Non-interest bearing bullion typically has an inverse relationship with interest rates, with higher rates damping gold's appeal to investors.

"It's probably just a matter of time before we see the yellow metal hit the $2,500 per ounce milestone," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Some profit-taking could kick in at that level, given that, at current prices, gold is entering overbought territory, Ozkardeskaya said, adding that it would be healthy to see some minor downside correction.

Gold's ability to find price support despite varying market conditions in the year-to-date is worth highlighting, said Commonwealth Bank of Australia analyst Vivek Dhar.

"While we think gold prices face uncertainty in coming months, we think the uncertainty has a positive skew, raising the risk that gold rises above our forecast of $2,500 an ounce by the end of the year," Dhar said.

On the other hand, gold's upside could be limited by the so-called Trump trade, which supports the U.S. dollar, said Ricardo Evangelista, senior analyst at ActivTrades.

As the prospect of another Trump presidency increases, so to does the likelihood of higher trade tariffs and a higher U.S. budget deficit, which could lead to tighter monetary policy and therefore depress gold prices, Evangelista said in a note.


Write to Joe Hoppe at joseph.hoppe@wsj.com


(END) Dow Jones Newswires

07-17-24 0627ET