Gold prices soared to a historic peak of US$2,482 (HK$19,344) per ounce yesterday, driven by market uncertainties surrounding a potential second term for Donald Trump in the US and expectations of interest rate cuts by the Federal Reserve.
At the close of trading, spot gold settled slightly lower at US$2,473.89 per ounce after peaking at an all-time high of US$2,482.29 earlier in the session. Meanwhile, US gold futures rose by 0.4 percent to US$2,478.50.
Alex Ebkarian, chief operating officer at Allegiance Gold, attributed the surge in gold prices to expectations of a September rate cut by the Federal Reserve and increased gold purchases by central banks compared to US Treasury yields. He commented, “It seems evident that the Federal Reserve is poised to cut rates in September and that, coupled with the concept of de-dollarization, is driving gold to these highs.”
Federal Reserve Chair Jerome Powell’s remarks earlier in the week suggesting that recent inflation data support confidence in achieving the central bank’s target contributed to hopes of a rate cut, propelling the Dow Jones Industrial Average up more than 700 points on Tuesday.
In contrast, Hong Kong stocks made marginal gains amid concerns over potential tensions between the US and China under a second Trump administration. The Hang Seng Index closed with a modest gain of 11 points, or 0.06 percent, at 17,739 points, while the Shanghai Composite Index declined by 0.5 percent.
In currency markets, the onshore yuan strengthened by 11 basis points to close at 7.2651 per US dollar.
Elsewhere, the Asian Development Bank maintained its growth forecast for China at 4.8 percent for the year despite concerns over the property market, while revising upward its growth projections for the broader Asia-Pacific region to 5 percent. Standard Chartered Bank also held its growth outlook for China’s economy steady at 4.8 percent for 2024.
In regulatory news, China’s central bank initiated fresh inspections on bond investments at commercial banks in efforts to curb an unprecedented rally. Regional branches of the People’s Bank of China, including those in Zhejiang, Jiangsu, and Jilin provinces, have reportedly queried lenders about their outstanding positions, holding structures, and leverage.
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