Gold climbs to record high on hope for bigger US rate cut
Softer dollar and the expectation the Fed will announce a larger rate cut boost metal
16 September 2024 - 07:42
byDaksh Grover
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Bengaluru — Gold prices surged to record highs on Monday, driven by a softer dollar and expectations of a larger interest rate cut by the US Federal Reserve this week.
Spot gold was up 0.4% to $2,585.54/oz by 3.38am GMT, after hitting a record high of $2,588.81 earlier in the session. US gold futures edged 0.1% higher to $2,613.40.
The dollar weakened 0.2%, making gold less expensive for other currency holders.
“The prospect of the Fed potentially wielding the axe by delivering a 50 basis point (bp) cut this week has sent gold and the dollar in opposite directions,” said Tim Waterer, chief market analyst at KCM Trade.
“Overall conditions for gold remain favourable, with further gains likely. If the dollar continues its downward trend, gold could reach $2,700 by year-end.”
All eyes will be on the Fed this week as speculation mounts over the extent of the rate cut at its September 17-18 monetary policy meeting and the pace of future reductions. The Bank of England and Bank of Japan are also announcing policy decisions later this week.
Markets are currently pricing in an 59% probability of a 50bp cut on Wednesday, up from 43% on Friday, according to the CME FedWatch tool. This would be Fed’s first rate cut since 2020.
Data on Friday showed that US consumer sentiment improved in September amid subsiding inflation, though Americans remained cautious ahead of the November presidential election.
Zero-yield bullion tends to be a preferred investment amid lower interest rates and geopolitical turmoil.
Elsewhere, Republican presidential candidate Donald Trump was the subject of a second assassination attempt on Sunday, according to the FBI.
Spot silver gained 1% to $30.95/oz, marking it highest level in two months.
Platinum climbed 0.5% to $1,000.35 and palladium edged 0.1% higher to $1,069.52.
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 climbs to record high on hope for bigger US rate cut
Softer dollar and the expectation the Fed will announce a larger rate cut boost metal
Bengaluru — Gold prices surged to record highs on Monday, driven by a softer dollar and expectations of a larger interest rate cut by the US Federal Reserve this week.
Spot gold was up 0.4% to $2,585.54/oz by 3.38am GMT, after hitting a record high of $2,588.81 earlier in the session. US gold futures edged 0.1% higher to $2,613.40.
The dollar weakened 0.2%, making gold less expensive for other currency holders.
“The prospect of the Fed potentially wielding the axe by delivering a 50 basis point (bp) cut this week has sent gold and the dollar in opposite directions,” said Tim Waterer, chief market analyst at KCM Trade.
“Overall conditions for gold remain favourable, with further gains likely. If the dollar continues its downward trend, gold could reach $2,700 by year-end.”
All eyes will be on the Fed this week as speculation mounts over the extent of the rate cut at its September 17-18 monetary policy meeting and the pace of future reductions. The Bank of England and Bank of Japan are also announcing policy decisions later this week.
Markets are currently pricing in an 59% probability of a 50bp cut on Wednesday, up from 43% on Friday, according to the CME FedWatch tool. This would be Fed’s first rate cut since 2020.
Data on Friday showed that US consumer sentiment improved in September amid subsiding inflation, though Americans remained cautious ahead of the November presidential election.
Zero-yield bullion tends to be a preferred investment amid lower interest rates and geopolitical turmoil.
Elsewhere, Republican presidential candidate Donald Trump was the subject of a second assassination attempt on Sunday, according to the FBI.
Spot silver gained 1% to $30.95/oz, marking it highest level in two months.
Platinum climbed 0.5% to $1,000.35 and palladium edged 0.1% higher to $1,069.52.
Reuters
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