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Gold prices rise amid US central bank interest rates cut speculation
(MENAFN) Gold prices experienced a modest rise on Tuesday, buoyed by recent comments from Federal Reserve officials which have intensified market expectations for a significant interest rate cut later this year. Spot gold saw a slight increase of 0.1 percent, reaching USD2,408.77 per ounce by 0354 GMT. This uptick came after the precious metal had plummeted to its lowest point since July 26 in the prior session, a drop triggered by a widespread global sell-off fueled by escalating fears of a potential U.S. recession. Meanwhile, U.S. gold futures also experienced an increase, climbing by 0.2 percent to USD2,449.50.
Federal Reserve policymakers have sought to allay fears that the weaker-than-expected employment data for July signaled an imminent recession, suggesting instead that the economy is not in a free fall. Nonetheless, they acknowledged the necessity of lowering interest rates to stave off a possible economic downturn. This has led traders to anticipate a cumulative rate cut of 110 basis points by the end of the year, with a significant 70 percent probability of a 50 basis point reduction in September. Such a scenario typically exerts downward pressure on the dollar and bond yields, thereby enhancing the attractiveness of non-yielding assets like gold.
In the broader precious metals market, silver prices in spot transactions dipped by 0.2 percent, settling at USD27.23 per ounce. Platinum saw a more substantial gain, rising by 1.2 percent to USD917.30 per ounce. Palladium also experienced a positive shift, increasing by 0.9 percent to USD857.25 per ounce, recovering from its lowest level since August 2018, which it had hit on Monday. This varied movement among precious metals highlights the market's complex dynamics as investors respond to shifting economic signals and policy expectations.
Federal Reserve policymakers have sought to allay fears that the weaker-than-expected employment data for July signaled an imminent recession, suggesting instead that the economy is not in a free fall. Nonetheless, they acknowledged the necessity of lowering interest rates to stave off a possible economic downturn. This has led traders to anticipate a cumulative rate cut of 110 basis points by the end of the year, with a significant 70 percent probability of a 50 basis point reduction in September. Such a scenario typically exerts downward pressure on the dollar and bond yields, thereby enhancing the attractiveness of non-yielding assets like gold.
In the broader precious metals market, silver prices in spot transactions dipped by 0.2 percent, settling at USD27.23 per ounce. Platinum saw a more substantial gain, rising by 1.2 percent to USD917.30 per ounce. Palladium also experienced a positive shift, increasing by 0.9 percent to USD857.25 per ounce, recovering from its lowest level since August 2018, which it had hit on Monday. This varied movement among precious metals highlights the market's complex dynamics as investors respond to shifting economic signals and policy expectations.
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