Gold prices rise amid anticipation of Federal Reserve interest rate cuts
Date
7/16/2024 4:23:05 AM
(MENAFN) On Tuesday, Gold prices experienced a significant rise, driven by remarks from Federal Reserve Chairman Jerome Powell, which bolstered expectations for a potential interest rate cut in September. Investors, closely monitoring the economic landscape, eagerly awaited additional U.S. economic data for further insights into the future direction of monetary policy.
By 0424 GMT, spot gold had increased by 0.2 percent, reaching USD2,425.69 per ounce. This marked a continuation of the upward trend seen on Monday when gold prices peaked at USD2,449.89, the highest level since May 20. U.S. gold futures also saw a slight increase, rising by 0.1 percent to USD2,431.80 per ounce.
IG market strategist Yep Jun Rong noted that Powell's recent statements have effectively laid the groundwork for the anticipated rate cut. Markets are now fully factoring in this potential cut for September, which is likely to maintain a positive sentiment towards gold as the decision date approaches. Powell's comments on Monday highlighted that three U.S. inflation readings in the second quarter have somewhat increased the confidence that the pace of price increases is aligning with the Fed's target in a sustainable manner. This suggests that a rate cut could be imminent.
Lower interest rates typically enhance the appeal of non-yielding assets like gold. As a result, the market has responded positively to the prospect of reduced rates, with investors seeking refuge in gold amidst economic uncertainties. The anticipation of the U.S. retail sales data release, scheduled for 1230 GMT on Tuesday, and further comments from other Federal Reserve officials are key events that investors are keenly watching for additional clues on monetary policy.
In the broader precious metals market, other commodities showed varied performances. Spot silver decreased by 0.8 percent to USD30.75 per ounce, while platinum saw a slight decline of 0.3 percent, settling at USD992.26 per ounce. Palladium, on the other hand, experienced a modest increase of 0.4 percent, reaching USD954.18 per ounce. These fluctuations reflect the dynamic nature of the market as investors navigate the ongoing economic developments and policy expectations.
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