Gold near record highs after US rate cut

Bengaluru — Gold lingered near record high levels on Friday and was on track for a weekly gain after the Federal Reserve’s recent supersized interest rate reduction and on signs that further cuts were on the horizon.

Spot gold rose 0.2% to $2,592.17/oz of 3.09am GMT, up about 0.6% for the week so far.

Bullion rose to a record high of $2,599.92 on Wednesday after the Fed began easing monetary policy with a half-percentage-point rate cut. The Fed also projected a further half-point reduction by year-end, a full point next year, and an additional half-point in 2026. US gold futures edged up 0.1% to $2,617.30.

“Current trends are very positive for gold, and if these favourable market conditions continue, prices could reach between $2,600 and $2,800 over the next 12 months,” said Kyle Rodda, a financial market analyst at Capital.com.

Lower US interest rates and geopolitical uncertainty increase the appeal of holding bullion.

In the Middle East, Israeli warplanes carried out late on Thursday their most intense strikes on southern Lebanon in nearly a year of war, heightening the conflict between Israel and Lebanese armed group Hezbollah.

“Gold prices are expected to be well supported in the coming months due to a weaker US dollar and lower bond yields, as well as against a backdrop of elevated geopolitical tensions,” BMI said in a note.

Elsewhere, China, the world’s largest gold consumer, refrained from gold imports from Switzerland in August, for the first time since January 2021, customs data from the world’s biggest bullion refining and transit hub showed on Thursday.

Spot silver rose nearly 1% to $31.09/oz and palladium gained 0.6% to $1,086.75.

Platinum was steady at $988.30 and was down about 0.9% so far this week.

Reuters