Source: The Economic Times
Sept 24 as per Reuters – Gold prices remained close to record highs on Wednesday, as investors responded to caution conveyed by U.S. Federal Reserve Chair Jerome Powell regarding future interest rate cuts. Traders were waiting for U.S. inflation data later this week for additional indications on future Fed policy. Light profit-taking and overbought technical situations exerted a little pressure on gold as well.
Gold prices
- As of 0403 GMT, spot gold was at $3,765.29 per ounce, below Tuesday’s all-time high $3,790.82.
- U.S. gold futures for December delivery fell 0.5% to $3,798.50.
- The U.S. dollar index was steady near a one-week low, helping to make gold cheaper for buyers using other currencies.
Market Reaction
Powell described the Fed’s responsibility to balance high inflation against a potentially weakening job market in its consideration of interest rates. His comments were tentative and again did not provide much clarity on a timeline for any potential cuts.
Gold is facing some profit-taking and overbought conditions after Powell’s speech, which did not give clear signals on rates, said Kelvin Wong, senior market analyst at OANDA.
Wong added, “We may see a minor dip in gold prices today. However, both medium-term and short-term trends continue to support a bullish outlook.”
“If Friday’s data indicates inflation is rising more than policymakers might prefer, possibly due to tariffs, it could exert downward pressure on gold,” said Capital.com analyst Kyle Rodda.
Gold’s Relative Strength Index (RSI) was at 78, suggesting that the metal is overbought.
Upcoming Data
We have the weekly U.S. jobless claims report due out Thursday and the Personal Consumption Expenditures (PCE) index, which is the Fed’s primary measure of inflation, in the pipeline as well. The markets are betting on two 25-basis-point cuts in rates this year, with a greater likelihood of one in October and December, based on the CME FedWatch tool.
Additional Factors
The OECD suggested that the full impact of U.S. tariffs is still playing out. Some of the impact is being absorbed by corporations through reduced profit margins and inventory levels.
On the geopolitical side, NATO warned Russia after it violated Estonian airspace. However, it said it will use ‘all necessary military and non-military tools’ to protect its members from Russia.
Other Precious Metals
- Silver: $44.02 per ounce
- Platinum: $1,478.15
- Palladium: $1,214.78, down 0.4%
