Gold prices rise on September US rate-cut expectations

Gold prices firmed on Monday, aided by a weaker dollar and lower Treasury yields after dovish remarks from US Federal Reserve Chair Jerome Powell cemented expectations for a September rate cut.

Spot gold rose 0.4 per cent to $2,520.39 per ounce by 0756 GMT, after gaining more than 1 per cent in the previous session. US gold futures also gained 0.4 per cent to $2,556.00.

Powell on Friday endorsed an imminent start to rate cuts, saying further cooling in the job market would be unwelcome.

The dollar hovered near its lowest level in 13 months, making gold cheaper for other currency holders, while benchmark 10-year Treasury yields also eased.

“Gold will remain in vogue with investors so long as the dollar remains on the back foot ahead of anticipated rate cuts. If US yields remain suppressed, gold may fancy taking a run towards $2,550 this week if resistance around $2,530 can be cleared first,” said Tim Waterer, chief market analyst, KCM Trade.

Traders have fully priced in a cut for next month, with a 62 per cent chance of a 25 basis point reduction and a 38 per cent chance of a bigger 50 bp reduction, according to the CME FedWatch tool. A low interest rate environment tends to boost non-yielding bullion’s appeal.

Adding to gold’s upward momentum is the uncertainty caused by the ongoing Middle East tensions, said Kelvin Wong, OANDA’s senior market analyst for Asia Pacific.