Gold Hits Another Record as Weak US Data Bolsters Rate-Cut Case
Gold reached another all-time high as weak consumer confidence data bolstered the case for deeper interest-rate cuts from the Federal Reserve this year.
Bullion rose 1.2% to a record $2,659.66 an ounce, beating the previous high set on Monday. US consumer confidence unexpectedly fell in September by the most in three years on concerns about the labor market and the outlook for the broader economy. The dollar fell along with Treasury yields.
Gold has advanced since the Fed lowered its benchmark interest rate by half a percentage point last week, building on what was already a record-setting year for the precious metal. Swaps traders' wagers suggest they think at least one more major cut is in store this year.
Federal Reserve Governor Michelle Bowman said Tuesday the central bank should lower interest rates at a "measured" pace, arguing that inflationary risks remain and that the labor market has not shown significant weakening. That's in contrast to recent comments from other Fed officials who have described the risks to achieving the central bank's two goals — maximum employment and stable inflation — as roughly balanced or leaning toward employment.
US economic data due later this week, including personal consumption expenditure figures, will also likely play into market expectations of the central bank's next moves. Lower rates are often seen as positive for non-interest bearing gold.
Apart from the expectations of Fed rate cuts, bullion's roughly 29% rally so far this year has also been supported by robust purchasing by central banks and haven demand amid conflicts in the Middle East and Ukraine.
Spot gold rose 1.1% to $2,656.83 an ounce by 3:02 p.m. in New York. The Bloomberg Dollar Spot Index fell 0.4%. Palladium, platinum and silver all gained.
Source : Bloomberg
