Gold Prices Rise on Rate Cut Bets and Geopolitical Tensions

8 Aug 2024 , 09:32 AM

Gold prices edged higher on Thursday, buoyed by growing expectations of an interest rate cut by the US Federal Reserve and ongoing geopolitical tensions in the Middle East.

Spot gold increased by 0.3% to $2,387.37 per ounce, while US gold futures dipped slightly. Investors are increasingly betting on a 50 basis point interest rate cut by the Fed in September, with some analysts predicting further reductions later in the year. Lower interest rates typically boost gold’s appeal as a non-yielding asset.

The ongoing conflict between Israel and Iran has also contributed to gold’s safe-haven allure. Iran has vowed retaliation for the killing of a Hamas leader, fueling concerns about escalating tensions in the region.

While China, the world’s largest gold consumer, halted its central bank gold purchases in July, the overall demand for the precious metal remains supported by investor sentiment.

In other precious metals news, silver rose 0.6%, platinum fell 0.4%, and palladium gained 0.56%. Mining giant Impala Platinum reported a significant loss due to asset impairments.

The focus now shifts to US economic data, including jobless claims, and comments from Federal Reserve officials for further clues on the central bank’s monetary policy path.