Optimism about a US rate cut could propel the gold price to try the $2,500/oz level
13 August 2024 - 07:46
byDaksh Grover
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold prices eased on Tuesday as profit-taking kicked in after bullion hit a more than one-week high, while market players awaited key US inflation data that could provide further insight into the Federal Reserve’s next policy decision.
Spot gold fell 0.4% to $2,462.19/oz by 02.59am GMT, after hitting its highest level since August 2 earlier in the session. Prices rose more than 1% in the previous session.
US gold futures were little changed at $2,502.40.
“Gold had a solid start to the week though it eased moderately on some gentle profit-taking,” said Tim Waterer, chief market analyst at KCM Trade.
“Prices will benefit if the US inflation data comes in on the softer side of the ledger, which would reignite hopes of an aggressive rate cut from the Fed in September.”
Traders are waiting for July US producer price figures due later on Tuesday and consumer price index numbers on Wednesday to gauge the chance of outsize rate cuts. The CPI data is expected to show that headline and core prices rose 0.2% month on month.
Markets see about 50% chance of a 50 basis point rate cut in September, according to the CME FedWatch Tool. A low interest rate environment tends to boost non-yielding bullion’s appeal.
“If markets become more optimistic of a 50 basis points cut coming to fruition, this could propel the gold price to make a run at the $2,500 level,” Waterer said.
On the geopolitical front, Israeli Prime Minister Benjamin Netanyahu traded barbs with his defence minister, underscoring the deep internal splits that continue to plague the government as the war in Gaza risks spilling out into a wider regional conflict.
Among other metals, spot silver fell 1.2% to $27.67/oz, platinum edged 0.3% lower to $933.96 and palladium shed 0.6% to $914.25.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Gold slips on profit taking
Optimism about a US rate cut could propel the gold price to try the $2,500/oz level
Gold prices eased on Tuesday as profit-taking kicked in after bullion hit a more than one-week high, while market players awaited key US inflation data that could provide further insight into the Federal Reserve’s next policy decision.
Spot gold fell 0.4% to $2,462.19/oz by 02.59am GMT, after hitting its highest level since August 2 earlier in the session. Prices rose more than 1% in the previous session.
US gold futures were little changed at $2,502.40.
“Gold had a solid start to the week though it eased moderately on some gentle profit-taking,” said Tim Waterer, chief market analyst at KCM Trade.
“Prices will benefit if the US inflation data comes in on the softer side of the ledger, which would reignite hopes of an aggressive rate cut from the Fed in September.”
Traders are waiting for July US producer price figures due later on Tuesday and consumer price index numbers on Wednesday to gauge the chance of outsize rate cuts. The CPI data is expected to show that headline and core prices rose 0.2% month on month.
Markets see about 50% chance of a 50 basis point rate cut in September, according to the CME FedWatch Tool. A low interest rate environment tends to boost non-yielding bullion’s appeal.
“If markets become more optimistic of a 50 basis points cut coming to fruition, this could propel the gold price to make a run at the $2,500 level,” Waterer said.
On the geopolitical front, Israeli Prime Minister Benjamin Netanyahu traded barbs with his defence minister, underscoring the deep internal splits that continue to plague the government as the war in Gaza risks spilling out into a wider regional conflict.
Among other metals, spot silver fell 1.2% to $27.67/oz, platinum edged 0.3% lower to $933.96 and palladium shed 0.6% to $914.25.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.