Gold falls short of record highs after Fed Chairman Powell announces smaller rate cuts

Gold falls short of record highs after Fed Chairman Powell announces smaller rate cuts
Gold falls short of record highs after Fed Chairman Powell announces smaller rate cuts

Gold prices remained below recent records on Tuesday after the chairman of the US Federal Reserve tempered expectations of deeper interest rate cuts this year, with investors eagerly awaiting a series of data on employment this week to find out more.

Spot gold was steady at $2,635.58 an ounce at 0335 GMT, off a record high of $2,685.42 hit on Thursday. U.S. gold futures were down 0.1% at $2,657.00.

Fed Chairman Jerome Powell suggested Monday that the central bank would likely pursue quarter-percentage-point interest rate cuts in the future and was in “no rush” after new data have strengthened confidence in continued economic growth and consumer spending.

“We have a series of Fed speakers coming up, but policymakers’ reliance on data will likely be the common conclusion, which could leave sentiments more sensitive to economic data to move the dial around rate expectations,” said Yeap Jun Rong, IG market strategist.

“Any weaker than expected reading from upcoming US labor market data could support the idea of ​​a more aggressive easing process, which could provide some support for gold prices.

This week’s data includes ADP employment and nonfarm payrolls figures, which should shed light on the health of the U.S. labor market. Speeches from several Fed officials as well as data on job openings in the United States are also expected later in the day.

According to the CME FedWatch tool, markets now estimate around 64% chance of a 25 basis point cut in US interest rates in November, up from 47% on Friday.

Israel’s widely anticipated ground invasion of Lebanon appeared to come together early Tuesday, with the Israeli military saying troops had begun “limited” raids against Hezbollah targets in the border area.

Gold, which earns no interest, tends to lose favor with investors in a low interest rate environment. Bullion posted its best quarterly gain since 2016 on Monday, after the Fed kicked off its interest rate cut cycle with a half-percentage-point move at the September meeting .

After a significant price rally, factors that could dampen further gold gains include reduced demand from central banks due to easing geopolitical tensions, lower ETF inflows due to rate cuts less aggressive, and a decline in retail demand in China, Goldman Sachs said Monday. [GOL/ETF]

Elsewhere, spot silver was up 0.4% at $31.27 an ounce, platinum gained 0.7% to $982.70 and palladium fell 0.1% to $998. 37 dollars.

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