Gold prices continued their upward trend for the third consecutive session on Thursday, driven by growing speculation of an interest rate cut by the U.S. Federal Reserve in September. This surge in gold was supported by recent mild inflation data, which also weighed on the dollar. Spot gold saw a 0.1% increase, reaching $3,357.65 per ounce by 0410 GMT, while U.S. gold futures for December delivery dipped slightly to $3,406.80.
Kyle Rodda, a financial market analyst at Capital.com, highlighted that market sentiment suggests a potential 50 basis points cut by the Fed in September. This anticipation has led to a weaker dollar, pushing gold prices higher and driving down yields. Rodda mentioned that the technical setup for gold appears promising, with the trend indicating upward movement. The key lies in surpassing the $3,400 level consistently.
The dollar struggled near multi-week lows against other currencies, making gold a more attractive investment. Similarly, U.S. 10-year Treasury yields remained close to a one-week low. The subdued increase in U.S. consumer prices during July has further reinforced expectations of a Fed rate cut next month. Treasury Secretary Scott Bessent even suggested the likelihood of a 50-basis points reduction by the central bank.
According to data from LSEG, traders are almost certain about a rate cut on September 17 and are even considering a 6% chance of a more aggressive 50-basis points trim. Gold, as a non-yielding asset, tends to thrive in low-interest rate environments. Investors are eagerly awaiting upcoming U.S. economic indicators, such as the Producer Price Index, weekly jobless claims, and retail sales data, to gain insights into the Fed's monetary policy trajectory.
In the geopolitical arena, Ukrainian President Volodymyr Zelenskiy revealed that he cautioned U.S. President Donald Trump regarding Russian President Vladimir Putin's intentions ahead of their discussions, suggesting that Putin might not be entirely sincere about ending the ongoing conflict.
Elsewhere in the market, spot silver remained stable at $38.49 per ounce, platinum experienced a minor decline of 0.3% to $1,336.0, and palladium surged by 1.2% to $1,135.93. These metals are also influenced by the broader market dynamics and economic uncertainties.
