Gold set for fourth straight weekly gain as Fed rate cut bets grow
Gold prices are on track for a fourth consecutive weekly advance, boosted by expectations that the Federal Reserve will soon lower US interest rates.
Additional support has come from steady inflows into bullion-backed exchange-traded funds (ETFs), News.Az reports, citing Bloomberg.
Bullion rose above $3,650 an ounce, up almost 2% this week, after setting a record in Tuesday’s session. Silver, which can move in tandem, topped $42 an ounce to hit the highest since 2011. On Thursday, data showed US consumer prices rose as expected in August, handing Fed policymakers the leeway to reduce borrowing costs after a string of weak labor-market prints.
Traders have priced in at least one quarter-point cut at the Fed’s meeting next week, and possibly two more by the end of the year. The US dollar and 10-year Treasury yields have lost ground this week. Lower borrowing costs, falling yields, and a weaker greenback typically benefit the precious metal.
Gold has rallied by nearly 40% this year, making it one of the best performing commodities, and outpacing other market gauges including the S&P 500 Index. The surge has been supported by central-bank buying, geopolitical uncertainties, and inflows into ETFs. In addition to setting a nominal record this week, gold has also surpassed its inflation-adjusted peak set more than 45 years ago.
With gold more than doubling over the past three years, “a buy-and-hold strategy is increasingly risky at these levels,” said Priyanka Sachdeva, an analyst at Phillip Nova Pte. “Investors are more likely to trade headlines and momentum than commit long-term, meaning price action will stay lively, but not unidirectional.”
Silver could benefit if there are investors looking for a less expensive entry point to participate in the precious metals’ rally, she said.
Bullion-backed ETFs have expanded by almost 25 tons so far this week, according to data compiled by Bloomberg.
Gold has also been aided by President Donald Trump’s attempt to extend his influence over the US central bank. On Thursday, he asked an appeals court to pause a lower-court decision that blocked his bid to oust Fed Governor Lisa Cook for alleged mortgage fraud. The administration asked for a ruling by Monday, one day before Fed policymakers start their September meeting.
Prices traded 0.6% higher at $3,654.38 an ounce at 12:46 p.m. in Singapore. The Bloomberg Dollar Spot Index edged higher, on track for a weekly loss of 0.3%. Palladium headed for a weekly gain of almost 8%, while platinum rose towards $1,400 an ounce.
In Asia, Thai households are poised to buy more gold for a fifth year, as a rally in the local currency makes bullion more affordable. That’s complicating efforts by the central bank to curb the metal’s influence on the baht.
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