Gold holds near record high on US rate cut optimism

GOLD prices held steady on Monday (Aug 19) near a record high scaled in the previous session, as rising expectations of a US interest rate cut next month lifted bullion’s appeal.

Spot gold edged 0.2 per cent lower to US$2,501.19 per ounce by 0042 GMT. Prices had surged to an all-time high of US$2,509.65 on Friday.

US gold futures rose 0.1 per cent to US$2,540.00.

Data released on Friday showed that US single-family homebuilding fell in July as higher mortgage rates and house prices kept prospective buyers on the sidelines, suggesting inflation was trending down.

Last week, strong retail sales numbers and lower-than-expected unemployment claims, along with mild inflation data, restored confidence in the world’s largest economy.

Traders are confident that the US Federal Reserve will cut rates on Sep 18 and the focus is now on the size of the reduction. They are pricing in a 75.5 per cent chance of a 25 basis point cut and a 24.5 per cent chance of a 50 bp reduction, according to CME FedWatch tool.

A low interest rate environment tends to boost non-yielding bullion’s appeal.

Federal Reserve Bank of Chicago president Austan Goolsbee said on Friday that the US economy is not showing signs of overheating, so central bank officials should be wary of keeping restrictive policy in place longer than necessary.

The market will now look out for minutes of the Fed’s July policy meeting on Wednesday and chair Jerome Powell’s speech on the US economic outlook this Friday at the Jackson Hole symposium, for further cues.

SEE ALSO

Gold tops US$2,500 for first time on outlook for lower rates

Elsewhere, Israeli strikes killed 19 people in Gaza on Sunday, including six children, Palestinian health authorities said, ahead of a visit to the region by US Secretary of State Antony Blinken to try to push forward ceasefire talks.

Spot silver fell 0.22 per cent to US$28.94 per ounce, platinum slipped 0.1 per cent to US$953.06 and palladium shed 0.8 per cent to US$943.46. REUTERS