Gold Prices Surge 9.6% in a Month Amid Federal Reserve Expectations
Gold prices have surged 9.6% in the past month, offering some relief to investors. Despite remaining nearly stagnant over the past year with a -1.8% return, several factors are driving this rally. Expectations around Federal Reserve policy and bond-market interventions that signal downward pressure on long-end US Treasury yields have contributed to the recent run-up.
According to Mohit Bagdi, head of research at MIRA Money, 'expectations of lower real rates have supported the demand for non-yielding gold.' Concerns over the US fiscal position, with national debt nearing $40 trillion, have also led investors to shift money into assets such as gold that cannot be created easily like paper currency. Central-bank buying has provided structural support to gold.
The rally may continue due to monetary easing and anticipated interest-rate cuts, which could push gold higher. 'The run-up could continue if the Federal Reserve's September 15-16 meeting produces a favourable announcement,' says Gnanasekar Thiagarajan, director at Commtrendz Research.