Gold steady amid US rate cut bets

Gold prices held steady on Monday as investors balanced profit-taking with concerns over a potential US recession and expectations of interest rate cuts.

Spot gold was little changed at $2,443.44 per ounce, after earlier declining by one per cent. US gold futures rose 0.7 per cent to $2,485.80.

“There is some profit-taking happening while traders try and gauge how aggressive the Fed may become in September with regards to the size of the rate cut,” said Tim Waterer, chief market analyst, KCM Trade.

However, he added that the overall outlook for gold remains positive due to anticipated dovish monetary policy from the US.

Last Friday’s weaker-than-expected US jobs report, which saw unemployment rise to 4.3 per cent, has bolstered expectations of a rate cut at the Federal Reserve’s September meeting.

Traders are now pricing in a more than 70 per cent chance of a 50-basis point rate reduction, compared to just 11.5 per cent a week ago. Lower interest rates typically benefit gold as they reduce the opportunity cost of holding the non-yielding asset.

Despite these factors, Richmond Federal Reserve President Thomas Barkin maintained a cautious stance on monetary policy on Friday.

Investors will be watching the final July S&P Global services and ISM non-manufacturing PMI data later in the day for further economic insights.

Silver prices were flat at $28.52 per ounce, platinum declined 0.5 per cent to $953.25, and palladium unchanged at $889.98.

Attribution: Reuters