Gold hardly changed amid rate cut hopes
Fri Aug 16 2024
Gold prices steadied on Friday and were headed for a weekly gain on optimism about a US interest rate cut, while traders wait for Federal Reserve chair Jerome Powell’s speech due next week for cues on the size of the cut. Spot gold eased 0.2% to $2,450.91/oz/ by 3.20am GMT and prices have climbed nearly 1% this week. US gold futures fell 0.2% to $2,488.50.
US economic data this week eliminated fears about a recession but traders are convinced the Fed will slash rates on in September.
Markets see a 75% chance of a 25 basis point (bp) cut next month and a 25% chance of a 50bp reduction, the CME FedWatch tool showed. Traders were evenly split at the start of the week between the two cut options.
“The bullish outlook for gold remains intact given the lower trajectory expected for global interest rates. The precious metal still poised to make a possible run at $2,500,” said Tim Waterer, chief market analyst, KCM Trade.
“But in the absence of a pickup in safe haven demand, it may require the dollar and bond yield to take a step lower for gold to reach the $2,500 level.”
A low interest rate environment tends to boost non-yielding bullion’s appeal.
Minutes of the Fed’s July policy meeting is due on Wednesday and Powell will speak on the US economic outlook next Friday at the Jackson Hole symposium.
Elsewhere, a new round of Gaza ceasefire talks was under way in Doha, as Palestinian health authorities reported over 40,000 deaths and pressure to end the war intensified.
Spot silver fell 0.8% to $28.16/oz, platinum ticked 0.1% lower to $951.95 and palladium shed 0.2% to $942.64. All metals were poised for weekly gains.