Ella 
During Asian trading on Wednesday, gold prices rose for three consecutive days, exceeding $2,480 and hitting a record high before falling into consolidation, with bulls taking a break before resuming their upward momentum.
With interest rate cuts by the U.S. Federal Reserve (Fed) in September inevitable, the record high price of non-interest-bearing gold was somewhat unexpected. According to CME Group’s FedWatch tool, the market is pricing in a rate cut by the Federal Reserve in September at 100%, and the probability of another rate cut in December is more than 60%.
Data on Tuesday showed U.S. retail sales had stagnated through June, down from a 0.3% growth rate in May. Retail sales control group growth was 0.9% in June, compared with a 0.4% increase in the previous month. However, the data showed the resilience of the U.S. economy but failed to change market bets that the Federal Reserve will cut interest rates in September.
As a result, the dollar resumed its losses after a brief rebound, helping gold set a new record above $2,450. Fed Governor Adrianna Coogler’s comments complement recent dovish comments from several Fed policymakers, including Chairman Jerome Powell, and add to bullish momentum for gold prices.
Gold traders are also pleased with strong physical demand for gold in India, even as gold prices remain elevated. Analysts at ANZ Banking Group (ANZ) said in a research report: “Price increases are still suppressing demand, but demand sensitivity has become less sensitive over the past year. Although gold prices rose by more than 10% in 2023, Consumer demand remains strong at 760 tonnes, down only 2% year-on-year, which is also in line with the long-term (2013-22) average.”
ANZ analysts added: “Higher capital gains and income growth have helped gold demand weather higher prices.”
Looking ahead, upside risks to gold prices remain as dovish sentiment surrounding the Fed’s interest rate outlook will continue to increase the appeal of non-interest-bearing gold. At the same time, any stimulus measures introduced by China to stimulate economic growth may also be a positive factor for gold prices.
