Gold prices rose in the European market on Tuesday, extending gains for the second day in a row and continuing to set fresh record highs, on track to surpass the $3,800 per ounce barrier for the first time in history, supported by the ongoing decline in US dollar levels against a basket of global currencies.
This comes amid growing expectations of a more accommodative path for interest rate cuts in the United States, especially after the recent signals from the Federal Reserve.
To reaffirm these expectations, global financial markets are awaiting later today an important speech by Federal Reserve Chair Jerome Powell, which is expected to provide strong evidence regarding the course of US monetary policy easing.
Price Overview
• Gold prices today: Gold rose by more than 1.0% to $3,785.24 an ounce, the highest level ever, from the opening level of $3,746.28, with a low recorded at $3,736.79.
• At Monday’s settlement, gold prices rose by 1.65%, marking a second consecutive daily gain and setting a new record high, supported by the decline in the US dollar and yields.
US Dollar
The dollar index fell on Tuesday by 0.1%, extending its losses for the second straight session, moving away from a two-week high at 97.82 points, reflecting the continued retreat in US dollar levels against a basket of global currencies.
Beyond technical corrections and profit-taking, the dollar remains under pressure from rising expectations of further Federal Reserve rate cuts in the coming period.
US Interest Rates
• The Federal Reserve carried out its first interest rate cut since December, lowering rates by 25 basis points last week, while signaling openness to further monetary easing.
• The Fed’s median projections point to an additional 50 basis points of rate cuts in 2025.
• The median forecast of Fed members shows one 25 basis point cut in 2026, with a similar reduction expected in 2027.
• New Fed governor Steven Miran said on Monday that the central bank is underestimating the degree of its monetary tightening and risks the labor market if it fails to implement significant cuts.
• According to CME’s FedWatch Tool, market pricing currently shows a 90% probability of a 25 basis point cut in October, versus a 10% chance of leaving rates unchanged.
Jerome Powell
To reprice the above contracts, markets later today await remarks by Fed Chair Jerome Powell on the US economic outlook at the Greater Providence Chamber of Commerce’s Economic Outlook Luncheon in Rhode Island, where he is also expected to take questions from the audience.
Gold Outlook
Kelvin Wong, market analyst for Asia-Pacific at OANDA, said: “The short-term trend remains bullish, but on a daily basis, we expect a short-term pullback due to technical factors.” He added that weakness in the dollar is currently supporting gold.
SPDR Fund
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 6.01 metric tons on Monday, marking a second consecutive daily increase, bringing the total to 1,000.57 metric tons, the highest level since August 3, 2022.
