Gold Prices Ease Slightly, Remain Near Record Highs on Fed Rate Cut Speculation

Gold prices dipped slightly in Asian trading on Tuesday but remained close to their record highs as traders increasingly believe that the Federal Reserve will begin cutting interest rates in September, leading to a weaker dollar.

Spot gold edged down 0.1% to $2,501.06 an ounce, while December gold futures also decreased by 0.1% to $2,538.70 an ounce as of 00:59 ET (04:59 GMT). Despite the small decline, gold continues to hover near the record high of $2,510.45 an ounce it reached last week. This rise has been fueled by growing market conviction that the Fed will reduce interest rates, with traders currently pricing in a 76% chance of a 25-basis-point cut and a 24% chance of a 50-basis-point reduction, according to CME FedWatch.

Lower interest rates tend to benefit gold, as they decrease the opportunity cost of holding non-yielding assets like the yellow metal. The focus now shifts to Federal Reserve Chair Jerome Powell’s upcoming speech at the Jackson Hole Symposium on Friday, where investors hope to gain more clarity on the Fed’s intentions regarding rate cuts. However, analysts caution that Powell may not specify the magnitude of any potential rate cuts.

Other precious metals showed mixed performance, with platinum futures slightly down 0.1% to $964.65 an ounce, while silver futures rose 0.4% to $29.415 an ounce. Silver has been a strong performer recently, rising in tandem with gold’s gains.