This marked its first consecutive cuts in over a decade, as the ECB battles a weakening economic outlook. Analysts predict more cuts are on the horizon. In the U.S., traders expect the Federal Reserve to continue its easing policy after its significant rate cut in September.
Positive U.S. macroeconomic data, including a 0.4% increase in September retail sales and lower-than-expected jobless claims of 241,000, bolstered the belief that the Fed will move cautiously, but steadily, toward additional cuts.
Dollar Weakens, Gold Gains Momentum
Adding further momentum to gold’s rally is the recent retreat in the U.S. Dollar. After hitting its highest level since August, the dollar has dipped, allowing gold to rise as the weaker greenback makes the metal more affordable for international buyers.
“With the U.S. Dollar pulling back, alongside expectations of a more accommodative stance from the Fed, gold is clearly benefiting from a bullish outlook,” said a senior commodities strategist.
Geopolitical Risks and Election Uncertainty Drive Safe-Haven Demand
While central bank policy plays a major role in gold’s upward trajectory, ongoing geopolitical tensions and uncertainty surrounding the U.S. presidential election are further boosting demand for the metal.
Investors are increasingly seeking gold as a hedge against volatility, as global risks remain heightened.
