Gold extends gains on easing rate hike fears, markets await US Fed minutes
This comes after last week’s soft US economic data raised hopes that the Fed will keep rates on hold this year
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[SINGAPORE] Gold rose for a third straight session on Tuesday (Aug 18) as fears of a US interest rate hike in September eased, with investors awaiting minutes from the US Federal Reserve’s latest meeting for fresh clues on the monetary policy path.
Spot gold was up 0.2 per cent at US$4,424.28 per ounce by 0130 GMT, while US gold futures for December delivery edged 0.2 per cent higher to US$4,480.90.
The US dollar lingered around multi-month lows against most major currencies. A weaker US currency makes dollar-priced metals less expensive for holders of other currencies.
Gold is extending its gains “after last week’s soft US economic data, which has raised hopes that the Fed will keep rates on hold this year”, IG market analyst Tony Sycamore said.
Bullion tends to perform well in a low interest rate environment as it reduces the opportunity cost of holding non-yielding assets.
The US central bank will keep its key interest rate unchanged in September and through end-2026, according to most economists in a Reuters poll.
Market pricing for a September quarter-point hike flipped to a near-65 per cent chance of a hold after unexpected job losses in July, lower-than-expected consumer price inflation and weaker retail sales.
Market focus will be on the minutes of the Fed’s most recent policy meeting, due to be released on Wednesday.
“Additionally, gold appears to be regaining its safe haven status as hawkish rhetoric from Iran helped gold brush off higher yields,” Sycamore said.
Iran will shift to a “fully offensive” military posture because efforts to negotiate a permanent end to the war with the US have stalled, a senior Iranian official told Reuters, as Washington ruled out extending a temporary ceasefire agreement.
Among other metals, spot silver rose 0.9 per cent to US$66.40 per ounce. Platinum inched 0.2 per cent higher to US$1,772.75, while palladium was down 0.3 per cent at US$1,330.05. BLOOMBERG
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