Gold rises as September easing becomes more likely

26 Aug 2024 , 09:56 AM

Gold prices have risen on Monday, extending their gains from the previous session, as Federal Reserve Chair Jerome Powell’s dovish statements reinforced expectations of a rate decrease next month.

Spot gold was up 0.2% to $2,516.09 per ounce. U.S. gold futures gained 0.2% to $2,551.30.

The dollar remained near its lowest level in roughly eight months, making gold cheaper for other currency holders, as benchmark 10-year yields fell.

On Friday, Powell hinted support for policy easing, saying that “the time has come” for the Fed to drop rates amid mounting job market vulnerabilities, despite the fact that inflation was approaching the US central bank’s target of 2%.

According to the CME FedWatch tool, traders have fully priced in next month’s Fed easing, with a 64% chance of a 25-basis-point decrease and a 36% possibility of a larger 50-basis-point reduction.

A low interest rate environment tends to make non-yielding bullion more appealing.

Meanwhile, on the geopolitical front, Hezbollah launched missiles and drones at Israel early Sunday, forcing Israel’s military to hit Lebanon with approximately 100 jets, marking one of the most significant engagements in ten months of border fighting.

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