Gold prices were muted on Tuesday as the US dollar remained robust, with investors keenly awaiting insights into the Federal Reserve’s future interest rate policy.
At the time of writing, spot gold was trading at $2,651.63 per ounce, reflecting a modest increase of 0.3%. Meanwhile, US gold futures were flat at $2,666.40.
Despite this, resilience appears to be the overarching narrative for gold, as the precious metal remains close to its recent record highs, according to Yeap Jun Rong, a market strategist at IG. “The yellow metal is holding strong even in the face of dollar strength,” he said.
Looking ahead, the uncertainty surrounding the US elections could push demand for gold as a safe-haven asset. Yeap suggested that anticipated Fed rate cuts, likely in increments of 25 basis points, could propel gold prices to new heights, potentially targeting $2,800 by the end of the year.
Federal Reserve governor Christopher Waller has urged “more caution” regarding rate cuts, while Minneapolis Fed president Neel Kashkari said that further reductions are likely as the central bank approaches its 2% inflation target.
Current market sentiment reflects an 87% probability of a 25-basis-point cut in November, which could enhance the appeal of non-yielding bullion as lower interest rates typically boost gold’s attractiveness.
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