Gold prices settle above USD2,500 amid expectations of U.S. interest rate cuts, geopolitical tensions
Date
8/27/2024 7:41:58 AM
(MENAFN) Gold prices saw minimal changes on Tuesday, maintaining their position above the psychological threshold of USD2,500 an ounce. This stability comes amid growing investor optimism regarding a potential U.S. interest rate cut and ongoing concerns about conflicts in the Middle East. As of 0610 GMT, spot gold was steady at USD2,515.51 per ounce, having risen more than 21 percent this year, with an all-time high of USD2,531.60 recorded on August 20. In contrast, U.S. gold futures decreased by 0.2 percent to USD2,551.
Market expectations are leaning towards a U.S. rate cut in September, though the extent of the reduction remains uncertain. The debate over the size of the cut could lead investors to adopt a wait-and-see approach as they await further economic data. According to CME Group's FedWatch service, 70 percent of traders anticipate a 25 basis point rate cut, while 30 percent are forecasting a larger 50 basis point reduction. Lower interest rates typically benefit gold, which does not yield any returns. San Francisco Federal Reserve President Mary Daly has indicated that borrowing costs might be reduced by a quarter percentage point next month.
Gold's positive performance during previous Fed rate cuts, coupled with robust demand from central banks and its role as a hedge against geopolitical and economic uncertainties, suggests that prices may continue to rise. Additionally, among other precious metals, spot silver rose by 0.6 percent to USD30.07 per ounce, while platinum fell by 0.2 percent to USD960.10. Palladium, on the other hand, increased by 0.8 percent to USD965.91.
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