Gold prices settle near record high amid expectations of US interest rate cuts

(MENAFN) Gold prices remained relatively stable in early Monday trading, hovering near the record highs achieved in the previous session. This stability in the gold market comes as investors anticipate a potential interest rate cut by the U.S. Federal Reserve next month, which has significantly bolstered the appeal of the precious metal. By 0042 GMT, spot gold experienced a slight dip of 0.2 percent, settling at USD2,501.19 per ounce, following its peak of USD2,509.65 per ounce on Friday, marking an all-time high. Meanwhile, U.S. gold futures saw a minor increase of 0.1 percent, reaching USD2,540 per ounce.

The gold market's resilience is closely linked to recent economic data from the United States, particularly in the housing sector. The latest reports indicate a decline in single-family home construction in July, attributed to the combination of higher mortgage rates and elevated home prices, which have deterred potential buyers. This slowdown in the housing market is seen as a sign that inflationary pressures are easing. Last week's positive retail sales figures and unexpectedly low jobless claims, alongside moderate inflation data, have reinforced confidence in the stability of the U.S. economy. Consequently, traders are increasingly confident that the Federal Reserve will proceed with an interest rate cut on September 18. The focus has now shifted to the magnitude of the cut, with market forecasts, as per CME’s FedWatch tool, suggesting a 75.5 percent probability of a 25 basis point reduction and a 24.5 percent chance of a 50 basis point reduction.

In this context, a lower interest rate environment is generally favorable for gold, as the non-yielding asset becomes more attractive to investors seeking safe-haven assets. Market participants are now eagerly awaiting the release of the U.S. Federal Reserve's July policy meeting minutes on Wednesday, as well as Fed Chairman Jerome Powell's upcoming speech on the U.S. economic outlook on Friday, for further insights into the Fed’s future monetary policy. As for other precious metals, spot silver experienced a slight decline of 0.22 percent, trading at USD28.94 per ounce, while platinum edged down by 0.1 percent to USD953.06 per ounce, and palladium dropped by 0.8 percent to USD943.46 per ounce according to data. 

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