Gold Holds Above $2,500 as Dollar Weakens

20 Aug 2024 , 09:22 AM

Gold prices remained above $2,500 on Tuesday, supported by a weaker US dollar and Treasury yields, as traders awaited minutes from the Federal Reserve’s most recent policy meeting for more clues on interest rate cuts.

Spot gold rose 0.1% to $2,505.92 per ounce. Prices reached an all-time high of $2,509.65 on Friday.

US gold futures increased 0.1% to $2,543.90.

The US dollar plummeted to a seven-month low in the previous session, making gold more tempting to international purchasers. Benchmark 10-year Treasury yields also fell.

The Fed is likely to lower rates by 25 basis points at each of the remaining three 2024 sessions, with a small majority of economists surveyed by Reuters rejecting recession concerns.

According to the CME FedWatch tool, traders are presently pricing in a 75.5% possibility of a 25 basis point rate drop. A low interest rate environment tends to make non-yielding bullion more appealing.

The Wall Street Journal reported on Monday that Minneapolis Fed President Neel Kashkari said it was reasonable to discuss potentially reducing US interest rates in September due to the increased probability of a weaker labour market.

The market is now watching for fresh clues from the Fed’s July policy meeting minutes, which are due on Wednesday, and Chair Jerome Powell’s statement on the US economic outlook at the Jackson Hole symposium on Friday.

On the geopolitical front, U.S. Secretary of State Antony Blinken said Monday that Washington’s latest diplomatic push to establish a ceasefire accord in Gaza was “probably the best, maybe the last opportunity” and urged all stakeholders to see the arrangement through to completion.

Spot silver declined 0.3% to $29.39 per ounce, while platinum increased 0.3% to $956.41 and palladium decreased 0.2% to $930.25.

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