Gold Steadies Near Record Ahead of Expected Rate Cut From Fed
Gold held a gain that saw it reach a fresh record, as investors bet on a Federal Reserve rate cut this week and weighed the scope for more monetary easing in coming months.
Bullion traded less than $10 below Monday’s all-time high of $3,685.64, where it was also supported by a gauge of the US dollar falling to the lowest in more than seven weeks. While a rate cut this week is priced in by markets, the Fed will also release its quarterly update of economic and rate forecasts, dubbed the dot plot, and Chair Jerome Powell will hold his post-decision press conference.
A string of weak labor data and no major inflation surprises have boosted prospects for further rate cuts this year. That would be positive for gold, which doesn’t pay interest.
Meanwhile, US President Donald Trump’s mounting pressure on the Fed, including his effort to oust Governor Lisa Cook, has reinforced bets on more dovish monetary policy. In addition, the administration’s economic advisor Stephen Miran is on his way to joining the central bank as soon as Tuesday.
Gold has surged more than 40% this year, outpacing major assets such as the S&P 500 index, and recently surpassed its inflation-adjusted peak reached in 1980. Persistent trade and geopolitical uncertainties, along with concerted purchases from central banks and inflows to exchange-traded funds, have added to the momentum. Goldman Sachs Group Inc. has forecast bullion could approach $5,000 an ounce if just 1% of privately-held Treasuries shift to the precious metal.
Gold traded little changed at $3,677.71 an ounce as of 8:12 a.m. Singapore time, following its 1% rise on Monday. The Bloomberg Dollar Spot Index was steady. Silver steadied below the highest price in 14 years, reached on Monday. Platinum edged lower, and palladium was flat.
Source : Bloomberg
