Gold Nears $2,500 as Fed Cuts Eyed

19 Aug 2024 , 09:35 AM

Gold prices fell on Monday, hovering around the important $2,500 mark, as traders took profits after bullion reached an all-time high in the previous session on anticipation of a US interest rate cut next month.

Spot gold was down 0.2% at $2,502.78 per ounce, while US gold futures rose 0.2% to $2,541.80.

On Friday, bullion reached an all-time high of $2,509.65 due to expectations that the Federal Reserve will decrease interest rates in September. This, combined with rising geopolitical tensions and substantial central bank buying, has driven bullion prices up more than 20% this year.

Last week, solid U.S. retail sales and lower-than-expected unemployment claims, together with benign inflation figures, restored confidence in the world’s largest economy.

Traders are convinced that the US Federal Reserve will lower interest rates next month, and the focus is now on the extent of the reduction. They are pricing in a 75.5% possibility of a 25-basis-point decrease, according to the CME FedWatch tool.

The market will also look for additional clues from the Fed’s July policy meeting minutes, which will be released on Wednesday.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, gained about 1% on Friday. COMEX gold speculators also increased their net long position by 34,197 contracts for the week ending August 13, according to statistics.

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