Gold prices continued their record-breaking rally on Tuesday, driven by growing expectations of a US interest rate cut as early as September. Spot gold rose by 0.2 per cent to $US3,643.57 per ounce, after hitting a new high of $US3,673.95 earlier in the session. US gold futures for December delivery also saw gains, settling 0.1 per cent higher at $US3,682.2.
The surge in gold prices is primarily attributed to market anticipation that the Federal Reserve will imminently begin cutting interest rates. According to Bart Melek, head of commodity strategies at TD Securities, traders are currently pricing in a 92 per cent chance of a 25-basis-point rate cut next week. This sentiment follows recent data indicating a significant weakening in US job growth during August. Lower interest rates typically weaken the dollar and bond yields, making non-yielding assets like gold more attractive to investors.
Despite a slight rise in the dollar index, it remained near a seven-week low against its rivals. Gold has surpassed $US3,600/oz, achieving multiple record highs this year, supported by factors such as a weak dollar, strong central bank buying, dovish monetary policies, and heightened global uncertainty. John Ciampaglia, CEO of Sprott Asset Management, said the markets will continue to rally because he does not see a shift that’s going to happen with respect to tariff policy, trade relations or geopolitics.
In other precious metals, spot silver experienced a decline, falling 1.2 per cent to $US40.86 per ounce. Platinum also dropped, decreasing by 1.4 per cent to $US1,363.14, while palladium slipped 0.3 per cent to $US1,130.61.
