Gold Reaches New Record High as Softer US Growth Weakens Dollar
Gold has surged to a historic high, breaking its previous record set in October, as the US dollar weakened following weaker-than-expected economic data.
The US gross domestic product (GDP) increased by an annualized 2.3% in the fourth quarter, below the forecasted 2.6% growth. This data softened the dollar, making gold more appealing to investors holding non-US currencies.
"The softer than expected GDP print has softened the dollar further," said Ole Hansen, head of commodities strategy at Saxo Bank A/S. "This leaves the door wide open for additional rate cuts."
Lower interest rates typically support gold, as it pays no interest. However, the Federal Reserve held rates steady at its January meeting, indicating caution in reducing rates further.
Spot gold rose by 1% to $2,788.86 per ounce in New York as of 10:19 a.m. EST.