Gold trades close to all-time high ahead of Powell’s policy cues

WASHINGTON: Gold prices held their ground on Tuesday after touching an all-time high earlier in the day, as expectations of further US interest rate cuts and a weaker dollar kept the precious metal in focus. Traders, however, remained cautious ahead of a closely watched speech by Federal Reserve Chair Jerome Powell later in the day.

Record high and cautious pullback

Spot gold was trading at $3,743.39 per ounce as of 0238 GMT, slightly below its new record of $3,759.02 reached earlier in the session. US gold futures for December delivery inched up 0.1 percent to $3,779.50.

Market analysts said the weaker dollar, which slipped 0.1 percent on Tuesday, was making gold more attractive for overseas buyers. Kelvin Wong, senior market analyst at OANDA, noted that while the broader trend for gold remained bullish, a short-term technical pullback was possible. He pointed to support levels at $3,710 and $3,690.

Focus on Powell’s speech

Investors are now turning their attention to Powell’s remarks at 1635 GMT for clearer guidance on the Fed’s monetary policy path. The central bank cut rates by 25 basis points last week, citing concerns over the labour market, and signalled more cuts could follow. However, officials also cautioned about the risks of persistent inflation.

The debate inside the Fed remains divided. Newly appointed Governor Stephen Miran argued that policy is currently too tight and risks damaging the job market unless deeper cuts are made. But three of his colleagues pushed back, warning the bank must remain careful about inflationary pressures.

According to the CME FedWatch tool, markets are pricing in a 90 percent chance of another quarter-point cut in October and a 75 percent likelihood of another in December.

Broader outlook and other metals

In a research note, ANZ said the combination of slowing US growth, higher inflation risks, a weaker dollar and global uncertainty would keep demand for gold robust. The bank also noted that investment appetite for silver was likely to remain strong as long as gold prices stay elevated.

Spot silver slipped 0.9 percent to $43.67 an ounce, hovering near a 14-year high. Platinum fell 0.3 percent to $1,412.80, while palladium eased 0.2 percent to $1,176.44.

Read next: Global unrest, weak demand cap oil price gains