Gold prices soared to record levels on Tuesday, driven by increasing expectations of a September interest rate cut. Gold futures climbed 1.7% to $2,471.1 per ounce, surpassing the previous peak of $2,454.20 set in May.

Spot gold also achieved an all-time high, rising 1.8% to $2,465.95. This surge in gold prices reflects a growing investor interest following recent dovish comments from the Federal Reserve and softer inflation data in June. The market now fully anticipates a rate cut in September.

A weakening U.S. dollar further fueled the demand for gold. Despite a brief rebound on Tuesday, the dollar had recently dipped to a five-week low.

Strategists from UBS noted that the strong sentiment towards gold and a “buy-the-dip” mentality among investors have contributed to the rapid rally in response to favorable U.S. economic data and Federal Reserve expectations. They also highlighted that the current market dynamics suggest potential for further upside in gold prices.

The rising geopolitical risks and central bank concerns over holding USD- and EUR-denominated assets have also spurred a multi-year increase in gold demand. Central banks’ purchases of gold have reached levels not seen since the late 1960s.

Gold mining stocks responded positively to the surge in gold prices. The VanEck Gold Miners ETF saw a 3% gain, while U.S.-listed shares of Harmony Gold and Gold Fields rose 16% and 6%, respectively.