Spot gold was 0.2% higher at $2,581.37 an ounce after hitting a record high of $2,589.59 and U.S. gold futures settled down 0.1% to $2,608.90
Gold prices extended gains to an all-time high on Monday, supported by a softer dollar and the prospect of a big rate cut by the U.S. Fed at its policy meeting this week.
Spot gold was 0.2% higher at $2,581.37 an ounce by 1832 GMT, after hitting a record high of $2,589.59. U.S. gold futures settled down 0.1% to $2,608.90.
The dollar index declined 0.3%, making the bullion more attractive to buyers holding other currencies.
50 bps rate cut from the Fed is priced in the market right now. That is why gold futures are as high as they are and I think that gold futures will come down if we only see a 25 bp cut, according to Phillip Streible, chief market strategist at Blue Line Futures.
The focal point of this week is the Fed interest rate decision due on Wednesday. Traders’ expectations are for a 61% probability of a cut of 50 bps, shows the CME FedWatch tool.
The latest attempt on former president Trump created some political uncertainty that would tend to be positive for gold, according to Peter A. Grant, VP and senior metals strategist at Zaner Metals.
Bullion is considered a safe asset during political and economic uncertainty. It also tends to thrive in a low-rate environment as higher rates reduce the appeal of holding non-yielding gold.
We expect recovery in strategic investments in gold will push prices higher. A 100 basis point cut could see 200–250 (metric) tons of ETFs net flows over the coming months, ANZ analysts said in a note.
We expect gold prices to move towards $2,700 in the short term and reach a high of $2,900 by the end of 2025, the note added.
