The price of gold continued its impressive rally for the seventh consecutive day on Wednesday, reaching a new peak around $3,557 per troy ounce. This surge is attributed to a rising interest in safe-haven assets amid a sell-off in long-term government bonds. The selling pressure has led to a decline in bond yields, enhancing the appeal of gold, which does not generate any yield in comparison.
The drop in yields also highlights growing concerns among investors regarding the government’s fiscal health, particularly the escalating debt burden. This scenario raises the risk of tightened public spending, ultimately increasing market demand for hedging assets. In this light, gold has once again emerged as a top choice for investors looking to guard against global uncertainties.
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In addition to bond factors, strong expectations that the Federal Reserve will cut interest rates this month have further supported the rally in gold prices. According to the CME FedWatch Tool, the likelihood of a 25 basis point rate cut at the upcoming meeting on September 17 is nearly 92%. This prospect of a looser monetary policy is likely to weaken the US dollar, providing additional momentum for gold’s bullish trend in the short term.
