Gold prices rose to a new record high, helped by weaker U.S. currency and rising expectations for further aggressive monetary easing by the Federal Reserve.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.11% to 100.35, making greenback-priced bullion less expensive for other currency holders.
Gold also continues to be supported by news from China, which yesterday announced a number of stimulus measures, including the planned reduction of banks' reserve requirements by 50 basis points, signals of a possible further reduction in loan rates, as well as measures to support the real estate market.
Meanwhile, according to the CME FedWatch Tool, markets see a 58.2% probability of a 0.50% rate cut at the Fed’s November meeting (up from 37% a week earlier) and a 48.9% probability of a 0.25% rate cut in December (compared to 48.8% a week earlier), with a 0.75% rate cut expected by the end of the year. Zero-yield bullion tends to be a preferred investment in a low-rate environment.
Gradually, the focus of investors' attention is shifting to the speech by Fed Chairman Jerome Powell (on Thursday) and the publication of US inflation data (on Friday) for further policy cues.
Geopolitical tensions in the Middle East and increased fears of a full-scale war have also increased demand for gold, which is considered a safe haven asset.