2319.30 euros per ounce

Gold price at record high thanks to falling interest rates

The gold price continues to soar.

(Bild: APA/dpa/Armin Weigel)

The price of gold continued its record run on Friday with the prospect of falling interest rates. On the London Stock Exchange, the price of a troy ounce (approx. 31.1 grams) rose to 2572.98 US dollars, its highest level ever. Calculated in euros, the price also reached a record high of 2319.30 euros per ounce.

Since the beginning of the year, the precious metal has now gained around 25 percent in value. The strongest driver for the soaring price is speculation about falling interest rates. As gold itself does not yield any interest, the prospect of falling interest rates, for example on government bonds, is increasing demand for the precious metal.

Further interest rate cuts expected
On Thursday, the European Central Bank (ECB) lowered the deposit rate, currently the most important key interest rate, by 0.25 percentage points, thus continuing the interest rate turnaround in the eurozone. In addition: "The market is expecting further interest rate cuts in the coming months," said commodities expert Carsten Fritsch from Commerzbank.

In addition, falling interest rates are also expected in the USA. Following clear indications from the ranks of the US Federal Reserve, the first interest rate cut since the inflation wave is firmly expected next week. However, the US monetary authorities have left the extent and sequence of future interest rate cuts open and made the decision dependent on the further development of economic data. At times, weak economic data from the US had increased speculation of a larger interest rate cut of 0.50 percentage points, which also boosted the gold price.

Gaza war as a price driver
Most recently, the Gaza war between Israel and the Islamist terrorist organization Hamas and the associated concerns about an escalation of the conflict in the Middle East also drove the gold price up several times.