Proactive Investors - The price of gold touched $2,600 per ounce for the first time ever last night after the US Federal Reserve cut rates by half a percentage point.
Gold momentarily hit an all-time high as Fed chief Jerome Powell began to speak at a press conference after the policy decision was published.
But the price fell back to around $2,550 shortly after, however has been rising again this morning in the Asian and European trading sessions.
Having said it was waiting for core inflation to fall back to its target rate, analysts said the Fed instead was front-loading its rate-cutting campaign in order to avoid an economic recession.
Fed chair Jerome Powell said that starting the rate-cutting cycle with a large cut would protect against a downturn, though he framed the decision as a "recalibration" and was not "the new pace" for easing.
Kathleen Brooks, head of research at XTB, said there were some market observers who "worry that this is over-optimistic, and it does not take account of another flare up in inflation".
"This is why we expect gold to continue to trade with an upward bias in the medium term," she said.
Naeem Aslam, chief investment officer at Zaye Capital, said gold got a boost "due to the weakness in the dollar index, and gold traders believe that the path of least resistance for the shiny metal is very skewed to the upside".
He said the belief among many gold traders is that "any weakness in the economic data would provide enough fuel for speculators to increase their bets on the Fed launching another [rate-cut] bombshell".