Expectations of significant interest rate cuts by the Federal Reserve drive gold prices to a new historical high

The price of gold refreshed its record high to $2588.95 per ounce on Monday, aided by a softening dollar and market expectations that the Federal Reserve will make its first rate cut since 2020 this week, possibly up to 50 basis points. Tim Waterer, chief market analyst at KCM Trade, said "The prospect of the Fed cutting rates by 50 basis points this week is causing gold and the dollar to move in opposite directions. The overall situation for gold remains favorable and may rise further. If the dollar continues to fall, the price of gold could reach $2700 per ounce by year-end." All eyes will be on the Federal Reserve this week as speculation grows about how much it will cut interest rates at its monetary policy meeting on September 17-18 and future pace of cuts. According to CME's Fed Watch tool, there is currently a 59% chance that rates will be cut by 50 basis points on Wednesday, up from last Friday's estimate of 43%.