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The recent spike in gold prices can be largely attributed to expectations of interest rate cuts. Weak employment data has almost guaranteed that the Federal Reserve will reduce rates this month, encouraging investors to seek assets that benefit from lower yields. When interest rates fall, bond yields decline, the dollar weakens, and gold tends to rise—often creating a positive feedback loop.
Additionally, the dollar index has dropped significantly this year, further boosting non-yielding assets like gold and cryptocurrencies. The combination of a weakening dollar and anticipated rate reductions acts as rocket fuel, pushing gold prices higher.