Gold Holds Strong as Weak US Data Reinforces Fed Rate-Cut
The yellow metal experienced a slight rise as traders grew more confident that the US Federal Reserve would lower interest rates
Quick overview
- Gold prices rose as traders anticipate a potential interest rate cut by the US Federal Reserve in September.
- There is a 93 percent likelihood of a benchmark borrowing cost reduction following disappointing job data.
- Lower interest rates typically enhance gold's appeal as a non-yielding asset amid economic uncertainty.
- Analysts predict gold could reach $4,000 an ounce by the end of next year due to various market factors.
The yellow metal experienced a slight rise as traders grew more confident that the US Federal Reserve would lower interest rates at its upcoming September meeting. In London, the price of a pound was about $3,370 an ounce early.
Traders are now pricing in a 93 percent chance that it will cut benchmark borrowing costs. This comes after the Fed released weaker-than-expected job data, raising additional concerns about the economy when the US central bank meets again next month.
Gold, which doesn’t pay interest, usually benefits from lower rates. The metal’s appeal as a haven is being bolstered by concerns regarding the independence of the US central bank.
Fed Governor Adriana Kugler’s resignation could permit President Donald Trump to appoint a successor who supports his rate-cutting policies. This year, rising geopolitical tensions, trade wars, central bank purchases, and wagers on rate cuts have driven the price of gold up by nearly 30%.
Many analysts and investors expect more gains; according to Fidelity International, bullion could reach $4,000 an ounce by the end of next year..
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