Gold prices eased slightly on Monday, hovering around the key $2,500 per ounce level as traders cashed in profits after the precious metal reached an all-time high in the previous session. The excitement was fueled by growing expectations of a U.S. interest rate cut next month.
As of 03:17 GMT, spot gold was down 0.2% at $2,502.78 per ounce, while U.S. gold futures edged up by 0.2% to $2,541.80. The recent surge in gold prices, which saw bullion hit a record $2,509.65 on Friday, has been driven by a combination of factors, including the prospect of a Federal Reserve rate cut, escalating geopolitical tensions, and strong central bank buying. So far this year, gold has soared over 20%.
“Gold has been chasing the psychological $2,500 level for several months, and now that it has been reached, we are seeing some natural profit-taking occur,” explained Tim Waterer, Chief Market Analyst at KCM Trade.
Last week’s positive U.S. economic data, including strong retail sales and lower-than-expected unemployment claims, coupled with mild inflation, bolstered confidence in the resilience of the world’s largest economy. Traders are now betting on a rate cut by the Federal Reserve in September, with the CME FedWatch tool indicating a 75.5% probability of a 25-basis-point reduction.
“Traders will be looking towards Jerome Powell’s tone and language at Jackson Hole on Friday to fill in some of the blanks in this regard,” Waterer added. The market is also eagerly anticipating the release of minutes from the Fed’s July policy meeting on Wednesday for additional clues.
Investors’ enthusiasm for gold is further reflected in the holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, which saw a nearly 1% increase on Friday. Additionally, COMEX gold speculators raised their net long positions by 34,197 contracts for the week ending August 13, indicating strong market sentiment.
Meanwhile, several Chinese banks have received new gold import quotas from the central bank, anticipating a resurgence in demand despite the metal’s record-high prices.
In other precious metals, spot silver rose by 0.2% to $29.08 per ounce, platinum gained 0.4% to $957.75, and palladium slipped by 0.4% to $947.13.
As the market navigates these developments, all eyes will be on Powell’s upcoming speech at Jackson Hole and the Fed’s policy meeting minutes to gauge the future trajectory of interest rates and their impact on gold prices.
