Gold prices surge to all-time high amid US rate cut expectations and demand from China

Strong Demand from China whose reserves are low, as well as September interest rate cut expectations from the US Fed drive up gold prices.

Gold prices soared to all-time high, hitting a record of $2,482.29 on Wednesday, July 17, with spot gold climbing 0.2% to $2,473.87 per ounce as of 0250 GMT, hitting a record peak of $2,482.29.

The surge in gold prices was mostly led by anticipation of a rate cut by the US Fed in September (Unsplash)

In India, gold prices are at ₹74,908 as of 11:30 A.M on the MCX, opening at ₹74,340, with the high being ₹74,945 and the low being ₹74,340.

What led to the rise in gold prices?

1) US interest rate cut expectations

The surge in gold prices was mostly led by anticipation of a rate cut by the US Fed in September, according to a Reuters report.

"Gold reached a new high watermark as investors position for the arrival of a lower interest rate environment,” said Tim Waterer, KCM Trade's chief market analyst, according to the Reuters report. “The $2,500 (range) is the next immediate target, though if the current momentum can be sustained we could be looking at prices further north from here before year-end."

This is because gold as an investment will become more attractive if interest rates from banks will be less.

2) Demand from China

Strong demand from China, the world’s largest gold consumer has also played a key role in the rising gold prices, the Reuters report stated, adding that China’s gold reserves are currently low and geopolitical tensions will keep the demand strong.

3) Favourable market sentiment

Investors currently are bullish on gold, willing to buy more gold if prices dip slightly, which on the longer course, will only increase prices more.

"If (gold) prices retrace, $2,450 near its previous record high seems like a tempting level for bulls to reload for its next leg higher," Reuters quoted City Index senior analyst Matt Simpson as saying.