Gold prices dip after a rally driven by U.S. rate-cut optimism, with spot gold slightly up at $2,517.38 per ounce as investors anticipate the Federal Reserve’s latest meeting minutes.
Bollywood Fever: Gold prices were trading slightly below record highs on Wednesday following a rally fueled by Western fund inflows and optimism about potential U.S. rate cuts. Investors are now turning their attention to the minutes from the Federal Reserve’s latest meeting, seeking clarity on the extent of potential rate reductions.
As of 0238 GMT, spot gold had inched up 0.1% to $2,517.38 per ounce, after reaching an all-time high of $2,531.60 on Tuesday. Meanwhile, U.S. gold futures increased by 0.2% to $2,555.20. So far this year, gold has surged by approximately $460, or 22%, driven by geopolitical tensions, uncertainty surrounding the upcoming U.S. Presidential elections, and expectations of further rate cuts, which have propelled the precious metal to new heights.
“Gold’s glittering rally is a reflection of markets anticipating deeper Fed cuts,” commented Christopher Wong, an FX strategist at OCBC.
Traders have fully priced in a rate cut at the Federal Reserve’s September meeting, with a 68% likelihood of a 25 basis point reduction, according to the CME FedWatch tool. The dollar has slipped to its lowest level this year against the euro, while benchmark 10-year Treasury yields have also dropped, making non-yielding bullion more attractive to holders of other currencies.
Investors are now awaiting the release of the Fed’s July policy meeting minutes later in the day, as well as Fed Chair Jerome Powell’s speech on the U.S. economic outlook at Jackson Hole on Friday.
“Given that the markets have already expected deep cuts to some extent, the bar is high for Powell to out-dove markets. Some reality check may suffice and not ruling out a pullback on gold prices in the near term,” Wong added.
In related news, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a 0.20% decline in its holdings on Tuesday, retreating from seven-month highs.
Other precious metals also saw gains, with spot silver rising 0.4% to $29.52 per ounce, platinum advancing 0.5% to $953.35, and palladium increasing 0.4% to $929.27.
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