Gold Price News: Gold Climbs To New Highs as ECB Cuts Rates

Gold prices pushed up to another all-time high on Thursday, after an interest rate cut by the European Central Bank and increased interest in safe-haven assets.

Prices climbed as high as $2,697 an ounce on Thursday – a fresh all-time high for gold. That compared with around $2,675 an ounce in late trades on Wednesday.

Rate cut supports gold prices

The ECB on Thursday cut interest rates by 25 basis points to 3.4% as expected, marking the third cut since May. The cut came as inflation in the Eurozone fell to 1.7% in September – falling below the ECB’s target of 2% for the first time in more than three years. Lower interest rates tend to support gold as they reduce the opportunity cost of holding non-yielding assets.

Geopolitical risk keeps gold supported

The wider background continues to look supportive for gold, due to falling interest rates, heightened geopolitical risk due to conflict in the Middle East and Ukraine, and uncertainty over the outcome of the November 5 US election. A win for Republican party candidate Donald Trump could usher in an environment of increased protectionism and trade tariffs – an outcome that is potentially supportive of safe havens like precious metals.

Gold’s continued march into higher territory came despite rising US treasury yields and a stronger US dollar on Thursday – both of which would normally weigh on gold prices.

Key economic data points to watch

The markets will be watching out for speeches by several US Fed officials on Friday and Monday, for further clues about interest rate changes at the central bank’s upcoming meeting on November 7.