Fed Rate Cut Expectations : Gold prices climb for the third consecutive session as investors anticipate a U.S. Federal Reserve interest rate cut. Dollar weakens, boosting precious metals.
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Gold Extends Gains as Fed Rate Cut Looms
Gold continued its upward trend on Thursday, marking the third straight day of gains. This rally comes amid growing expectations that the U.S. Federal Reserve may cut interest rates in September, following mild inflation data. A weaker dollar is also helping gold climb.
- Spot gold rose 0.4% to >>$3,367.53 per ounce.
- U.S. gold futures for December delivery increased 0.3% to >>$3,416.70.
Kyle Rodda, a financial market analyst at Capital.com, said,
“Markets are pricing in the chance that the Fed cuts 50 basis points in September. So the dollar is weakening, gold is going up, and yields are also down.”
Technical Outlook for Gold Prices
Analysts are optimistic about gold’s trend. Rodda added,
“The technical setup looks constructive. The trend still looks higher. We just need to see the market break through \$3,400 on a sustained basis.”
A weaker dollar makes gold cheaper for buyers using other currencies, while U.S. 10-year Treasury yields remain near a one-week low, further supporting the metal’s appeal.
Inflation Data Fuels, Fed Rate Cut Expectations
U.S. consumer prices rose only slightly in July, boosting expectations that the Fed may reduce rates next month. Treasury Secretary Scott Bessent highlighted a strong possibility of a 50 basis point rate cut.
Data compiled by LSEG shows traders are almost certain a cut will happen on September 17, with a small chance (around 6%) of an even larger reduction.
Gold, which does not yield interest, tends to perform well when rates are low.
Investors Eye Upcoming Economic Data
Market participants are keeping a close watch on upcoming U.S. economic data, which could influence the Fed’s decision:
- Producer Price Index (PPI)
- Weekly jobless claims
- Retail sales figures
These reports will provide clues about the central bank’s next steps.
Geopolitical News Impact
On the global front, Ukrainian President Volodymyr Zelenskiy mentioned he warned U.S. President Donald Trump before his talks with Vladimir Putin that the Russian leader might be “bluffing” regarding an end to the conflict.
Other Precious Metals Update
Alongside gold, other metals also saw gains:
- Spot silver rose 0.3% to $38.59 per ounce
- Platinum increased 0.1% to $1,340.55
- Palladium jumped 1.5% to $1,139.52
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