Gold prices soared to new all-time highs on Friday as the US dollar weakened in the lead-up to this week’s anticipated rate cuts.
At the same time, the Australian dollar price also rose sharply, exceeding $A3,800 an ounce.
Comex’s most active December contract settled at $US2,606.20, a gain of $US19 or 0.73% for the day.
This marked the second consecutive day of record-breaking highs, with the intraday peak reaching an unprecedented $US2,614.60 an ounce.
The Comex December gold futures price added 3.5% last week, and the gains are set to boost the prices of Australian gold companies again today.
Thursday’s significant gains and the continuation of the rally in early Friday trading saw some huge increases in the prices of local gold stocks. De Grey, with its massive Hemi project in WA, saw its shares rise by 7.4%, contributing to a more than 17% gain for the week.
Bellevue saw a 5.5% rise on Friday and more than 11% for the week, while Evolution achieved nearly a 7% gain on Friday and over 11% for the week.
Shares in Ramelius also jumped 9% on Friday, with a gain of more than 5% for the week.
However, after last week’s big rises, one might wonder if gold is entering a bubble. The fundamentals for the metal—falling inflation, declining bond yields, and a weaker US dollar—have been present for some time, yet the price continues to climb higher and higher.
Comex silver added 3.2% to $US31.08 per ounce after Thursday’s 4.5% jump, with silver gaining just under 10% for the week.
Comex copper rose by 3.8% last week, also helping lift local miners like Evolution, in addition to gold.
The US dollar fell to a one-week low, while the Australian dollar ended the week at just over 67 US cents.
“Regardless of the size of the initial Fed rate cut, we seem to be on the verge of a potentially long and frequent easing cycle, which is a scenario that bodes well for non-yielding assets such as gold,” said Tim Waterer, chief market analyst at KCM Trade.
The International Monetary Fund said on Thursday that it was appropriate for the Federal Reserve to begin a long-awaited monetary easing cycle at its meeting next week, as upside risks to inflation have subsided.
Traders see a 45% chance of a 50-basis-point reduction at this week’s meeting and 55% odds of a 25-basis-point cut.
Gold’s trajectory remains highly bullish amid continued uncertainty on the geopolitical and economic fronts, said Brian Lan of Singapore-based dealer GoldSilver Central, in comments to Reuters.
“Central bank gold purchases remain strong as the future looks somewhat bleak, and they want to hedge against risk,” he added.