Gold dips after record run as traders await cues from Fed

Bullion hit record high of $2,509.65 on Friday

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Gold bullion at a bank in Seoul. — AFP file

By Reuters

Published: Mon 19 Aug 2024, 10:08 PM

Gold eased on Monday after piercing the $2,500 ceiling in the previous session, as investors booked profits from the record run and positioned for more cues from the Federal Reserve and developments in the Middle East.

Spot gold was down 0.2 per cent at $2,503.50 per ounce as of 11:57am ET (1557 GMT), shy of the record high of $2,509.65 hit on Friday. U.S. gold futures rose 0.2 per cent to $2,542.10.

“We will not be surprised to see some consolidation/pull-back in the gold market as traders may be disappointed if the Fed only indicates a likelihood of a 0.25 bp rate cut and does not hint at the possibility of a larger 0.50 bp cut,” David Meger, director of alternative investments and trading at High Ridge Futures, said.

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Traders see a 77.5 per cent chance of the Fed cutting interest rates by 25 basis points (bps) in September, according to the CME FedWatch Tool.

The focus will turn to minutes from the Fed’s last policy meeting on Wednesday and Chair Jerome Powell’s speech at an economic symposium in Jackson Hole on Friday.

Gold may fall into the $2,479-$2,487 range following its failure to break resistance at $2,507, according to Reuters technical analyst Wang Tao.

But UBS analyst Giovanni Staunovo said gold could rise further in the coming months, likely reaching $2,600/oz by end-year, adding all eyes will be on any indication of an imminent rate cut from Powell.

On the physical front, several Chinese banks have been given new gold import quotas from the central bank, anticipating revived demand despite record high prices.

Gold demand is strong as geopolitical tensions, particularly from the Israel-Iran-Hamas conflict, drives safe-haven buying, Achilleas Georgolopoulos, investment analyst at forex broker XM, wrote in a note.

Silver rose 1.1 per cent to $29.33 per ounce. Platinum gained 0.3 per cent to $957.43, while palladium shed 2.2 per cent to $930.33.

Reuters

Published: Mon 19 Aug 2024, 10:08 PM

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