FED Rate Cut Helps Gold and Stocks Reach Record Highs

Gold extended its rally this week, with XAU/USD breaking above $2,600, hitting a new milestone following the Federal Reserve’s 50 basis point rate cut on Wednesday. By Friday, gold prices climbed to $2,625.69, driven by a combination of global interest rate reductions, a weaker US dollar, and rising geopolitical risks.

FED and Central Bank Influence

The Federal Reserve’s move to cut rates has set the stage for other central banks to follow. For example, the Philippines slashed its interest rates by 250 basis points, bringing the benchmark down to 7% from 9.50%, which has further contributed to the strength in GOLD prices.

Gold Chart Daily – The Bullish Momentum Is Not Stopping

Rising Physical Demand for Gold

In addition to monetary policy, there has been a notable increase in physical demand for gold as investors seek safety in uncertain times. The persistent fears of a slowdown in both the US and Chinese economies, alongside the risk of escalating geopolitical tensions in the Middle East, are pushing more investors toward gold.

Poland’s central bank has significantly increased its gold reserves, reaching a value of over €29 billion by the end of August. At the same time, Indian gold imports have surged to record highs, fueled by a recent tariff reduction on gold jewelry and bars, further driving the global bullion market higher.

Previous High Turns into Support for S&P 500 After New Record High

The stock market’s bullish momentum persists, with major indices delivering strong performances once again. The S&P 500 reached new record highs yesterday, surpassing previous resistance at around 5,700 points, which now seems to act as a support level, holding firm after a minor pullback on Friday.

This steady rise reflects renewed investor optimism, particularly in the technology sector, as market participants show confidence in the Federal Reserve’s monetary policy approach. The combination of easing rate cuts and solid economic data is fueling expectations for further gains.

Gold Live Chart