Gold prices hit all-time highs above $2,100 per ounce on Monday as Federal Reserve Chair Jerome Powell’s remarks elevated traders’ confidence that the US central bank could cut interest rates early next year.

Spot gold was up 0.6% at $2,083.81 per ounce by 0627 GMT, after surging to an all-time high of $2,111.39 earlier.

US gold futures rose 0.7% to $2,103.30.

“After his (Powell) speech, traders were more convinced that we’re currently at the peak of the US interest rates and therefore, the path forward from here is more likely to be down rather than up,” said KCM Trade chief market analyst Tim Waterer.

Powell on Friday said “the risks of under- and over-tightening are becoming more balanced”, but the Fed is not thinking about lowering rates right now.
Lower rates reduce the opportunity cost of holding a non-interest-bearing bullion.

Traders are now pricing in a 70% chance for a Fed rate cut by next March, CME’s FedWatch Tool showed, according to Reuters.

Backing market sentiment, data last week pointed out to cooling inflationary pressures, a gradually easing labor market, with Fed Governor Christopher Waller flagging a possible rate cut if inflation continues to decline.

“Technically, momentum is still looking strong after prices broke the resistance of $2,050/oz. Investors have been adding fresh long to position both against rising geopolitical tensions and rising prospects of Fed rate cuts,” ANZ commodity strategist Soni Kumari said.

“Long positions have reached the highest since May 2022, still positionings are not crowded. This suggest there will be further move up this week, if news flows remain supportive.”