The prices of the gold extended their record high on Tuesday, holding firm above the key $2,500 level, boosted by a weaker dollar and growing investor confidence that the Federal Reserve from the United States (Fed) will probably cut interest rates in September.
He gold Spot gold rose 0.1% to $2,507.45 an ounce by mid-morning, after hitting a record high of $2,531.60 earlier in the session. U.S. gold futures, meanwhile, gained around 0.2% to $2,545.60.
Meanwhile, the dollar index sank to a seven-month low, making gold more attractive to holders of other currencies, while benchmark 10-year U.S. bond yields fell.
“The key drivers of gold’s price action are financial investment demand, particularly with ETF buying picking up, and overall improved sentiment as expectations of the Fed’s easing cycle starting in September come to fruition,” said Aakash Doshi, head of North America commodities at Citi Research. Gold could hit $3,000 per ounce by mid-2025 and $2,600 by the end of 2024, he added.
Holdings of SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, rose to a seven-month high of 859 tonnes on Monday.
Eyes on the Fed
Markets are pricing in a probability of around 71.5% that the Fed cut out the interest rates by 25 basis points in September, according to CME’s FedWatch tool.
Traders will be closely monitoring the minutes of the meeting. monetary policy July 2019 Fed Policy Statement on Wednesday and Fed Chairman’s opening remarks, Jerome Powell, at the Jackson Hole symposium later in the week for more clues on rate cuts.
“Gold positioning could be overextended, with expectations of significant Fed rate cuts possibly leading to a correction if this narrative is challenged,” said Daniel Ghali, commodity strategist at TD Securities.
He gold, The gold standard, which tends to thrive in a low-interest rate environment, is up more than 20% so far this year and is heading for its best year since 2020. “Geopolitical uncertainties, rising speculative interest and significant global ETF inflows are further fueling gold’s uptrend,” said Joseph Cavatoni, market strategist at the World Gold Council.
On the other hand, the silver Spot crude fell 0.1% to $29.45 an ounce, platinum fell 0.4% to $950.20 and the palladium rose 0.3% to $935.00.
Source: Ambito
