Gold prices hovered near their record high on Thursday amid rising expectations of another large interest rate cut by the Federal Reserve as traders awaited Fed chair Jerome Powell’s comments for further insight into the policy outlook.
In the UAE, gold rates gained AED0.75 with 24-carat gold inching up to AED322.25 and 22-carat gold rising to AED298.25. Meanwhile, 21-carat gold reached AED288.75 and 18-carat gold was at AED247.50.
Globally, spot gold rose 0.21 percent to $2,662.65 as of 5:36 GMT, after hitting a record high of $2,670.43 in the previous session. Meanwhile, U.S. gold futures rose 0.05 percent to $2,686.05.
The dollar index steadied at 100.91 after falling from 100.94, making gold cheaper for other currency holders.
Traders expect second outsized rate cut
Gold prices rose as investors awaited Powell’s remarks due later in the day, along with U.S. inflation data due on Friday. A report from the Department of Commerce on Wednesday also revealed that sales of new U.S. single-family homes fell less than expected in August, signaling a recovery in the country’s property market.
The U.S. central bank delivered a 50-basis-point rate cut at its last policy meeting. Traders have now priced a 58 percent chance of another half-percentage-point cut in November, according to CME FedWatch Tool. In light of low interest rates and geopolitical turmoil, investors prefer investing in non-yielding assets including gold.
On Wednesday, Fed governor Adriana Kugler said that she views U.S. monetary policy as restrictive. With ongoing disinflation, she believes it is reasonable to consider decreasing interest rates further.
Elsewhere, China’s central bank launched its biggest stimulus since the pandemic in a bid to revive its weakening economy back toward the government’s growth target of 5 percent.
The intensifying conflict between Lebanon and Israel has also supported gold prices further.
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Other precious metals
Amid the rise in gold prices, the precious metals market witnessed a positive movement. Spot silver inched up 0.05 percent to $31.86 while platinum gained 0.87 percent to $996.90. Meanwhile, palladium rose 0.85 percent to $1,046.69.
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