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Gold News
Market Analysis
Gold prices pushed up to a new all-time high on Tuesday, as the markets reacted to US Fed comments suggesting a stronger chance of interest rate cuts in September.
Prices rallied as high as $2,466 an ounce on Tuesday, compared with $2,422 an ounce in late trades on Monday. The latest gains mean gold has topped its previous all-time highs of just over $2,450 an ounce seen on May 20.
KAU/USD 1-hourly Kinesis Exchange
The trigger for the renewed strength for gold was a speech by US Fed chair Jerome Powell on Monday. Powell noted that inflation had come in below expectations in June, suggesting that price increases are coming down towards the central bank’s target. He also said that inflation wouldn’t necessarily need to hit the 2% mark before the Fed starts to cut rates – a bullish factor for gold as lower rates cut the opportunity cost of holding non-yield-bearing assets.
The latest data from interest rate traders shows that the markets have now fully priced in a first US interest rate cut in September, with more than 90% expecting a 25-basis point cut, with a minority expecting a 50-point cut. A second cut is also widely anticipated in November.
Yields on US 10-year treasury notes also fell to a four-month low on Tuesday, providing a supportive element for gold prices.
Looking ahead, Wednesday will see US industrial production figures released for June, for the latest pulse check on the US economy.
Attention will then turn to Europe on Thursday with the ECB set to make an interest rate decision. Few expect anything other than a continuation of the current rate of 4.25% after the bank began its rate-cutting cycle in June, although the markets will be watching out for clues on the future path for monetary policy in a press conference, followed by a speech later by ECB President Christine Lagarde.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
Frank Watson
