Gold prices rose to just under $2,470 per troy ounce this morning, approaching the all-time high set in mid-July, boosted by comments made by Fed Chair Powell on Wednesday evening, notes Commerzbank commodities analyst Carsten Fritsch.
Market expects first Fed rate cut in September
“Gold prices rose to just under $2,470 per troy ounce this morning, approaching the all-time high set in mid-July. The price was boosted by comments made by Fed Chair Powell on Wednesday evening, who opened the door to a September rate cut at the Fed’s post-meeting press conference. Based on Fed funds futures, the market now firmly expects a first rate cut in September.”
“After yesterday’s weak US data, the market even started to price in a 50 basis point rate cut, although Powell had actually ruled this out in the press conference. Therefore, today’s US labour market data is interesting, especially since Powell had shifted the Fed’s focus more towards the labour market on Wednesday. Disappointing data may intensify interest rate speculation, and the price of gold in this case could rise further.”
“However, we are sceptical that the price increase will last. This is because we expect only two rate cuts by the Fed by the end of the year, while the market is already pricing in three rate cuts. However, gold is also receiving support from rising tensions in the Middle East (see above), which benefits from its role as a safe haven.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
