Gold hovers near record high on prospects of bigger Fed rate cut

Sep 17, 202400:53 UTC

GOLD

DXY

GLD

XAGUSD1!

Gold prices held steady on Tuesday to hover near record highs scaled in the previous session, as markets anticipate the beginning of a U.S. easing cycle, with expectations that it might start with an outsized rate cut.

FUNDAMENTALS

* Spot gold GOLD was flat at $2,582.84 per ounce, as of 0020 GMT. Bullion rose to a record high of $2,589.59 on Monday.

* U.S. gold futures GOLD were also steady at $2,609.90.

* All attention will turn towards the U.S. Federal Reserve this week where they are expected to announce at least a 25-basis-point cut to interest rates at the conclusion of its September policy meeting on Wednesday.

* Markets are currently pricing in an 62% probability of a 50-bp easing at the conclusion of the two-day meeting, against 43% on Friday. The odds have narrowed sharply after media reports revived the prospect of a more aggressive easing. (FEDWATCH)

* Zero-yield bullion tends to be a preferred investment amid lower interest rates and geopolitical turmoil.

* Markets will also focus on U.S. retail sales data due at 1230 GMT.

* Meanwhile, the dollar DXY weakened to near two-week low in the previous session, making greenback-priced gold less expensive for other currency holders.

* Elsewhere, the Bank of Japan is expected to keep monetary policy steady next week, but signal that further interest rate hikes are coming and highlight progress the economy is making in sustaining inflation around its 2% target.

* Investors also digested news from Sunday that Republican presidential candidate Donald Trump was the subject of a second assassination attempt.

* Political instability often supports gold prices, as investors seek the safety of the precious metal amid unstable or unpredictable conditions.

* SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.20% to 872.23 tonnes on Monday.

* Spot silver XAGUSD1! fell 0.2% to $30.70 per ounce, platinum PL1! rose 0.4% to $984.81 and palladium XPDUSD1! gained 0.4% to $1,080.78