Gold prices touch all-time high on expectations of lower US rates

WASHINGTON: Gold prices touched a fresh record on Tuesday, buoyed by a weaker dollar and growing expectations that the US Federal Reserve will cut interest rates this week.

Spot gold rose 0.1 percent to $3,681.18 per ounce as of 0326 GMT, after reaching an all-time high of $3,689.27 earlier in the session. US gold futures for December delivery were steady at $3,718.50.

Market bets on rate cut

Kyle Rodda, an analyst at Capital.com, said the mood among traders was strongly upbeat. “The sentiment is very bullish… markets are buying into rate cuts, going into this FOMC decision. The outlook remains strong for gold in the short to medium term,” he noted.

Rodda added that a lot of optimism about lower rates was already reflected in market pricing. He cautioned that if the Fed’s guidance does not align with those expectations, gold could face a sharp pullback. But if the central bank supports market bets, it could push prices beyond $3,700.

Traders widely expect the Fed to lower its benchmark rate by 25 basis points at the end of its two-day policy meeting on September 17, while a small number are betting on a larger 50 basis point cut, according to the CME FedWatch tool.

Lower interest rates typically make gold more attractive as they reduce the opportunity cost of holding the non-yielding metal, while also weakening the dollar.

Dollar weakens

The dollar hovered near a two-and-a-half-month low against the euro and close to a 10-month low versus the risk-sensitive Australian dollar, further lifting gold’s appeal for investors holding other currencies.

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose to 976.80 tonnes on Monday from 974.80 tonnes on Friday, reflecting stronger investor demand.

Meanwhile, political tensions hovered over the Fed. A US appeals court on Monday rejected President Donald Trump’s attempt to remove Fed Governor Lisa Cook, a move seen as a challenge to the central bank’s independence.

Other precious metals were weaker, with spot silver down 0.4 percent at $42.52 per ounce, platinum slipping 0.5 percent to $1,394.37, and palladium easing 0.3 percent to $1,180.64.

Gold price in Pakistan

Gold prices in Pakistan held steady on Monday, offering a brief pause after their record-setting run a day earlier. According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold stood firm at Rs386,300 per tola, while 10 grammes stayed unchanged at Rs331,189.

The calm followed a surge that had taken the precious metal to new highs, driven by global market momentum. International gold rates also showed little movement, hovering at $3,643 per ounce with a $20 premium. The market now watches closely to see if this stability signals a breather or the start of another climb.

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