In a remarkable rally, gold prices skyrocketed to a record high, surpassing the previous peak set in May, as hopes for Federal Reserve rate cuts surged and traders increased their bets on a potential second term for President Donald Trump. The spot bullion reached an astonishing $2,469.66 per ounce, supported by a series of catalysts driving up demand.

The primary factor behind this surge is the anticipation of an impending interest rate cut by the Federal Reserve. Speculation has been fueled by signs of slowing inflation in the United States, suggesting that the central bank may soon embark on a path of lowering interest rates. This development is particularly favorable for gold, as high interest rates typically have a negative impact on the precious metal, which does not bear any interest.

Despite the potential negative effect of high rates, gold has witnessed a staggering rise of nearly 20% this year. This surge can be attributed to several factors, including sizable purchases from central banks, robust consumer appetite in China, and increased demand for safe-haven assets amid growing geopolitical tensions. Additionally, the recent surge in holdings by exchange-traded funds has further invigorated the upward momentum of gold prices.

Experts suggest that the optimism about US interest rate cuts, combined with supportive economic data, has paved the way for gold to maintain its positive momentum. Ewa Manthey, a commodities strategist at ING Bank NV, emphasized the current favorable global geopolitical and macroeconomic landscape, projecting an expected increase in central bank demand for gold.

Fed Chair Jerome Powell's remarks regarding diminishing inflation and the increased confidence among policymakers in achieving the central bank's inflation goal have solidified trader expectations of two quarter-point rate reductions this year. Goldman Sachs Group Inc. even predicts three cuts, citing conducive conditions for easing.

Notably, gold's recent record-breaking rally aligns with earlier predictions. In June, consultancy Metals Focus forecasted a fresh all-time high for gold prices this year, while Citigroup Inc. forecasts a base case of $2,700-$3,000 per ounce by 2025.

In addition to the Fed rate cut speculations, investors are also factoring in the likelihood of President Trump's re-election into their gold investment decisions. Following a failed assassination attempt over the weekend and the dismissal of a criminal case against him, Trump's candidacy has gained momentum. David Higgins, head of trading at Merrion Gold, believes that a Trump presidency could yield support for gold, as retail customers, mainly smaller buyers, associate him with instability and tend to purchase gold in such circumstances.

At 4:31 p.m. in New York, spot gold was up 1.9% to $2,467.58 per ounce. The Bloomberg Dollar Spot Index remained relatively unchanged, while US 10-year Treasury yields experienced a decline. Silver, palladium, and platinum also observed upward movements in their prices.

Overall, the surge in gold prices to record levels is driven by a combination of factors, including prospects of Fed rate cuts and the anticipation of President Trump's re-election. These factors have created an optimistic environment for gold, with experts projecting continued positive momentum for the precious metal in the current global landscape.