Gold Breaks Through $4,600 Again, Market Begins to "Switch to Safe Mode"
Gold prices rallied again on Wednesday, rising above $4,600 per troy ounce. XAU/USD hovered around $4,620, reapproaching the record high of $4,634.64 set in the previous session.
The main driver came from expectations of a Fed interest rate cut. Softer US inflation data has made the market more confident that price pressures are cooling, making the likelihood of a rate cut seem greater—and this is typically fuel for gold.
The interest rate market is now divided: some project two cuts, while others see three cuts this year. These estimates are more aggressive than the median projection of Fed officials, which tends to be just one, providing additional support for gold.
Demand for safe haven assets has also risen as market concerns about the Fed's independence resurface. The emergence of a criminal investigation linked to Fed Chairman Jerome Powell's testimony in June has investors worried that the central bank will become more politicized—and gold typically benefits when policy uncertainty increases.
Geopolitical risks are reinforcing this sentiment. The market is monitoring the possibility of US involvement in Iran's political situation after repeated warnings of military action, coupled with talk of 25% tariffs on countries doing business with Iran, which could exacerbate tensions.
In the currency market, the US dollar is trending slightly lower after strengthening earlier. The DXY is hovering around 99.10, and this is helping gold as it becomes more affordable for buyers using other currencies.
On the economic data front, US core inflation rose 0.2% (MoM) and remained at 2.6% (YoY)—equivalent to a four-year low—while labor data showed nonfarm payrolls (NFP) continued to grow but moderately, with unemployment falling to 4.4% and wages rising 3.8% (YoY). Fed official Tom Barkin stated that the labor market remains stable but hiring appears selective, so future policy direction will remain highly dependent on subsequent data. (Asd)
5 Key Points:
- Gold is back above $4,600 and approaching a record high of $4,634.64.
- US inflation is "cooler," increasing the likelihood of a rate cut.
- The market is pricing in two or three cuts this year (more aggressive than the Fed's projections).
- The Fed's independence issue and tensions with Iran have boosted safe-haven demand.
- The dollar weakened slightly (DXY 99.10), supporting gold. (asd)
Source: Newsmaker.id
