Traders await key economic data after gold reaches new all-time high, fuelled by Federal Reserve remarks
Gold reached a new all-time high as traders analysed economic data and comments from Federal Reserve officials while awaiting key economic reports, according to BNN Bloomberg.
A few Federal Reserve officials indicated on Monday that further interest rate cuts remain possible, citing the ongoing pressure of current rates on the US economy.
Chicago Fed President Austan Goolsbee said during a Q&A session, “Over the next 12 months, we have a long way to come down to get the interest rate to something like neutral to try to hold the conditions where they are.”
Minneapolis Fed President Neel Kashkari also commented that he expects to see smaller, quarter-point rate cuts at the remaining two meetings of the year.
Earlier that day, data revealed a slight slowdown in US business activity in early September, with expectations falling and price indicators climbing to a six-month high. Bullion rose by 0.5 percent to reach a record US$2,634.90 per ounce, surpassing the previous high set on Friday.
This increase followed last week’s Federal Reserve decision to cut the benchmark interest rate by half a percentage point, further boosting gold’s already record-setting year.
After evaluating the Federal Reserve comments, traders are turning their attention to upcoming US personal consumption data and jobless claims due later in the week.
These reports could help shape the central bank's decisions regarding future rate cuts, which are often favourable for non-interest-bearing assets like gold.
A Saxo Bank A/S report noted, “The market looks increasingly in need of consolidation, but at this point, a deep one is needed to rattle hedge funds holding the largest bet on higher prices since 2020.”
Gold’s 27 percent rise this year has also been supported by strong central bank buying and safe-haven demand, particularly amid ongoing conflicts in the Middle East and Ukraine.
Michael Cuggino, president of Permanent Portfolio Family of Funds, believes these bullish factors will continue to push gold prices higher in the long term, even if some near-term price fluctuations occur.
His firm’s Permanent Portfolio fund is currently above its 20 percent target allocation in gold, and they are “not changing our allocation at this time.”
By 2:54 pm in New York, spot gold was up 0.2 percent, trading at US$2,626.99 per ounce. Meanwhile, the Bloomberg Dollar Spot Index remained largely unchanged, and the US 10-year Treasury yield dipped slightly. Palladium, platinum, and silver saw declines.
