In addition, bets on a rate cut by the Fed also boosted supply of the metal.
The prices of the gold Firmed on Monday, approaching their recent record high, amid strong bets on a September interest rate cut following dovish signals from the president of the Federal Reserve, Jerome Powell, and the demand for safe havens due to geopolitical risks in Middle East.
He gold Spot gold rose 0.2% to $2,514.73 an ounce by 11:41 a.m., just shy of the record high of $2,531.60 hit last week. Meanwhile, U.S. gold futures also gained 0.2% to $2,550.30.
“Dovish signals from Powell’s speech on Friday and interest in safe haven assets and geopolitical risks in Middle East “They’re precipitating the gold supply this morning,” said Peter A. Grant, vice president and senior metals strategist at Zaner Metals, referring to the hundreds of rockets and drones launched between Hezbollah and Israel.
“I have a short-term Fibonacci target (for gold prices) at $2,539.77 and then my secondary target is at $2,597.15,” Grant added.
Powell on Friday backed an imminent start of rate cuts and said that further cooling of the labor market would not be welcome. In that sense, traders have fully discounted a cut for next month, with a 69.5% probability of a 25 basis point (bp) reduction and a 30.5% probability of a 50 bp cut, according to the CME FedWatch tool., opens a new tab.
The ingots of gold, Traditionally seen as a hedge against geopolitical risks, gold tends to thrive in a low interest rate environment. “There may be some indication that China is going to come back, but even if it doesn’t, central bank demand has been pretty robust regardless of price this year and that’s going to continue,” Grant said. In that regard, gold demand in major consumers is expected to remain strong, India and China, improve in the coming months, industry officials said.
Meanwhile, the silver Spot silver held steady at $29.81, hitting a more than one-month high. “Industrial demand for silver looks relatively strong heading into 2025, particularly as solar PV demand appears to maintain a healthy growth pace,” Heraeus analysts wrote in a note.
Source: Ambito
