Gold slips from two-week peak as US dollar ticks up

[BENGALURU] Gold prices edged lower on Monday (Aug 25) as the US dollar crept higher, while increased US interest rate cut expectations following a dovish pivot from Federal Reserve chair Jerome Powell lent support to bullion.

Spot gold was down 0.2 per cent at US$3,364.25 per ounce, as at 9.09 am, after hitting its highest since Aug 11 on Friday. US gold futures for December delivery eased 0.3 per cent to US$3,409.80.

The US dollar index rose 0.2 per cent against its rivals after dropping to a four-week low, making gold less attractive to overseas buyers.

Powell on Friday signalled a possible interest rate cut at the US central bank’s meeting next month, saying that risks to the job market were rising but also noting inflation remained a threat and that a decision was not set in stone.

Markets are now pricing in an 87 per cent chance of a quarter-point rate cut at the Sep 17 policy meeting, and a cumulative 48 basis points of reductions by this year-end, according to the CME FedWatch Tool.

Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

Asian share markets rallied on Monday as investors celebrated the likely resumption of interest rate cuts in the US.

Investors now await a reading on US personal consumption prices on Friday that is expected to show core inflation creeping up to its highest since late 2023 at 2.9 per cent.

Physical gold demand in key Asian hubs remained subdued last week as price volatility kept buyers at bay, while jewellers in India resumed purchases ahead of a key festival season.

Elsewhere, spot silver was down 0.2 per cent at US$38.09 per ounce, platinum fell 0.3 per cent to US$1,356.95 and palladium slipped 0.6 per cent to US$1,119.67. REUTERS