Gold holds near record high on rate-cut bets, geopolitical tensions
Gold prices rose on Wednesday to trade near a record high scaled in the last session, as growing expectations of further interest rate cuts in the U.S. and heightened geopolitical uncertainty boosted demand for the safe-haven metal.
Spot gold was up 0.4% at $3,778.78 per ounce, as of 0743 GMT, after hitting a record high of $3,790.82 on Tuesday.
U.S. gold futures for December delivery edged down 0.1% to $3,812.10.
The S&P 500 (.SPX), opens new tab sank 0.6% on Tuesday in its biggest one-day loss in three weeks, after Federal Reserve Chair Jerome Powell's cautious remarks regarding further monetary easing.
"The rally is being fuelled by lower U.S. funding costs alongside a cocktail of investor concerns spanning overvalued equities, Fed independence, and mounting geopolitical risks," said Ole Hansen, head of commodity strategy at Saxo Bank.
Powell said that the central bank would continue to balance concerns surrounding weakness in the labour market and rising concerns on inflation, while Fed officials took stances on both sides of the monetary policy path divide.
Investors now look ahead to the U.S. Personal Consumption Expenditures index, the Fed's preferred inflation gauge, on Friday for further cues on rate cuts.
Market participants are pricing in two more 25-basis-point cuts this year, one each in October and December, with 93% and 79% probability, respectively, per the CME FedWatch tool, opens new tab.
Gold, considered a safe-haven asset during times of uncertainty, tends to perform well in a low-interest-rate environment.
Elsewhere, NATO warned Russia on Tuesday that it would use "all necessary military and non-military tools" to defend itself, as U.S. President Donald Trump shifted rhetoric by asserting Ukraine could recover all territory occupied by Russia.
"With geopolitical turbulence and economic uncertainty driving safe-haven demand, alongside growing expectations of a dovish Fed, gold (should) consolidate above $3,750 in the short term, with the prospect of a new resistance around $3,900," said Ricardo Evangelista, senior analyst at ActivTrades.
Spot silver rose 0.5% to $44.23 per ounce, trading a near 14-year high. Platinum climbed 0.4% to $1,483.53 and palladium gained 0.3% to $1,225.46.
Source: Reuters
