Gold prices rose to a fresh record high in Asian trade on Tuesday, building on sharp gains in past sessions on growing bets on a Federal Reserve interest rate cut next week, and a weaker dollar.
Safe-haven flows into gold also increased in the face of a fresh political crisis in France, where Prime Minister Francois Bayrou resigned after losing a vote of confidence in the National Assembly.
Political uncertainty in Japan after PM Shigeru Ishiba’s resignation, and prospects of more U.S. sanctions against Russia following a deadly weekend strike by Moscow against Ukraine, also contributed to bullion’s safe-haven demand.
As of 00:44 ET (04:44 GMT), Spot gold traded 0.6% higher at a record high of $3,656.70 an ounce, while Gold Futures for December hit a peak of $3,695.25/oz.
Fed easing bets boost gold prices to a fresh peak
Bullion prices rose sharply since last week after several data points highlighted a sustained cooling in the U.S. labor market. Most notable of these was nonfarm payrolls data, which showed the U.S. barely created any new jobs in August.
The prints drummed up hopes that the Fed will cut interest rates in September, with markets seen pricing in a 92.4% chance for a 25 basis point reduction during the Fed’s Sept 16-17 meeting. Markets were also pricing in a 7.6% chance for a bigger, 50 bps cut, CME Fedwatch showed.
Several Fed officials signaled in recent weeks that the central bank will be open to rate cuts amid more signs of cooling in the labor market. But they also flagged caution over sticky inflation, especially in the face of price increases stemming from U.S. President Donald Trump’s trade tariffs.
U.S. inflation data for August is due this week, with markets watching for any more upside in inflation, given that a bulk of Trump’s tariffs took effect last month.
Lower rates tend to benefit gold and metals, given that they lower the opportunity cost of investing in non-yielding assets over government bonds.
Metal markets rise, silver holds near 14-yr high
Other precious metals also gained on Tuesday, with Platinum Futures trading 0.6% higher at $1,397.25/oz.
Silver Futures gained 0.2% to $41.30 an ounce, falling below last week’s highest level not seen since August 2011.
Benchmark Copper Futures on the London Metal Exchange inched up 0.2% to $9,940.15 a ton, while U.S. Copper Futures also gained 0.2% to $4.58 a pound.
"Uncertainty over US tariffs on copper imports shifted supply from China to the US in the first half of the year. This trend may reverse in the second half, as Trump has delayed plans for a 50% tariff on refined copper for now," ING analysts said in a note.
Source :
https://www.investing.com/news/commodities-news/gold-prices-hit-record-high-above-3600oz-as-fed-rate-cut-bets-grow-4230423
