GOLD prices ticked up on Monday (Aug 26), extending gains from the last session as Federal Reserve chair Jerome Powell’s dovish remarks solidified expectations of an interest rate cut next month.
Spot gold rose 0.2 per cent to US$2,516.09 per ounce by 0027 GMT. US gold futures gained 0.2 per cent to US$2,551.30.
The US dollar hovered near its lowest level in about eight months, making gold cheaper for other currency holders, while benchmark 10-year yields also slipped.
On Friday, Powell signalled support for policy easing, saying that “the time has come” for the Fed to cut rates amid rising risks to the job market, even as inflation was in reach of the US central bank’s 2 per cent target.
Traders have fully priced in a Fed easing for next month, with a 64 per cent chance of a 25-basis-point (bp) cut and about 36 per cent chance of a bigger 50-bp reduction, according to the CME FedWatch tool.
A low interest rate environment tends to boost non-yielding bullion’s appeal.
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Meanwhile, on the geopolitical front, Hezbollah launched rockets and drones at Israel early on Sunday, prompting Israel’s military to strike Lebanon with around 100 jets, marking one of the biggest clashes in 10 months of border warfare.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.20 per cent to 856.12 tonnes on Friday.
On the physical demand side, a rally in gold prices stifled bullion’s appeal in major Asian hubs last week, with dealers offering deeper discounts to charm buyers.
Spot silver edged 0.3 per cent higher to US$29.90 per ounce, platinum was flat at US$962.65 and palladium fell 0.3 per cent to US$959.43. REUTERS
