Market Analysis

As investors look for further Fed hints, gold is close to its record high

Amos Simanungkalit · 20 Aug 2024152.5K Views

Gold remained near its record high on Tuesday as investors awaited insights from the U.S. Federal Reserve’s minutes and Chair Jerome Powell's upcoming speech to gauge potential rate cuts for the year.

Spot gold inched up by 0.2% to $2,500.08 per ounce by 0254 GMT, trading just below Friday's all-time high of $2,509.65. U.S. gold futures increased by 0.1% to $2,537.70.

"Gold prices have been relatively stable during the Asian session, as buyers attempt to maintain the new record high. "The broader upward trend for gold seems to be intact, with prices potentially aiming towards the $2,665 level from a technical standpoint."

Gold prices have surged over 20% this year, driven by expectations of Fed rate cuts starting in September, strong central bank purchases, and safe-haven demand amid tensions in the Middle East.

The appeal of non-yielding gold tends to rise in a low interest rate environment. The Fed is anticipated to reduce rates by 25 basis points at each of its remaining three meetings in 2024, with a majority of economists in a Reuters poll dismissing recession fears.

Traders will closely watch the minutes from the Fed's July meeting on Wednesday and Chair Jerome Powell's address at the Jackson Hole symposium on Friday for additional clues.

The U.S. dollar fell to a seven-month low in the previous session, providing support to gold priced in dollars.

Holdings in the SPDR Gold Trust (P), the largest gold-backed exchange-traded fund, rose to a seven-month high of 859 tonnes on Monday.

In other metals, spot silver dropped 0.8% to $29.25 per ounce, platinum increased by 0.6% to $958.95, and palladium fell by 0.8% to $924.75.