Gold’s rally continued on Wednesday, as COMEX prices hit an all-time high of $2,625 an ounce. Prices jumped after the Federal Reserve announced a larger-than-expected interest rate cut, cutting rates by 50 basis points. The move was predicted by a number of analysts and institutions, who also expected prices to continue rising.

Gold hits new record high on Fed rate cut

Gold, widely seen as a hedge against inflation and a neutral commodity, hit a new record high on Wednesday. The milestone is part of a rally that has seen the precious metal rise more than 30% in a year, driven by a number of key factors including current geopolitical uncertainty and strong demand from central banks.

However, Wednesday's surge was due to another reason. Gold prices rose after the Federal Reserve announced a deep interest rate cut, cutting interest rates by 50 basis points. There was no clear consensus on the size of the cut, with some economists expecting a cut of just 25 basis points, underscoring the impact of the announcement.

As a result, the price of precious metals futures on the Commodity Futures Exchange (COMEX), one of the largest commodity markets, rose to more than $2,625 an ounce during the trading session. Prices have since fallen to $2,616, but analysts expect deeper cuts to produce higher prices later this year.

Alex Ebkarian, CEO of Allegiance Gold, said:

The market is pricing in more and bigger rate cuts because we have fiscal and trade deficits, and that will further weaken the overall value of the dollar.

Gold's rally could take prices to $3,000 next year. Gold has already surpassed Citi's North American head of commodities Aakash Doshi's $2,600 forecast by the end of this year. Another prediction he made sees gold hitting $3,000 by mid-2025.

UBS also said that this gold rally still has a long way to go but gave a more cautious forecast. UBS forecasts that spot prices will reach $2,700 by mid-2025, driven by strong demand.

What do you think about the ongoing gold bull market? Let us know in the comments below.
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