Gold Poised for Fourth Monthly Gain on Fed Rate-Cut Optimism
Gold edged higher, on track for a fourth monthly gain, on heightened expectations for another interest-rate cut in the US.
The trading of futures and options on the Chicago Mercantile Exchange stopped for several hours due to a data center fault, affecting liquidity in precious metals markets and leading to choppy sessions with wider-than-usual bid-ask spreads.
Bullion was near $4,160 an ounce on Friday, up more than 2% for the week. A series of comments by Federal Reserve officials and the release of delayed economic data have supported the case for lower borrowing costs, which typically benefit gold as it doesn’t pay interest. Swap traders are pricing in a more-than-80% chance of a quarter-point cut in December.
Traders will be digesting every last clue for the next rate decision before the US central bank goes into an external communication blackout starting Saturday. A record-setting government shutdown has delayed key data, and some statistics will not be released at all, making it challenging for the Fed and investors to assess the state of the world’s largest economy.
Bullion has gained nearly every month this year, and is on track for its best annual performance since 1979. Elevated central-bank buying as well as robust non-sovereign inflows to exchange-traded funds supported the metal’s run to a record above $4,380 last month. Investors have piled into alternative assets in a wider retreat from government bonds and currencies.
The precious metal has consolidated above the $4,000-an-ounce level this month since pulling back from its peak. For the last four weeks, inflows to gold-backed ETFs have been flat, according to Bloomberg calculations.
Gold rose 0.1% to $4,161.58 an ounce as of 8:41 a.m. in London. The Bloomberg Dollar Spot Index added 0.1%. Platinum jumped 2%, while palladium fell 1.5%. Silver advanced as much as 1.5%, approaching the record high set last month, supported by ongoing supply tightness.
Source: Bloomberg.com
