Gold prices climbed higher on Thursday, buoyed by expectations of a September interest rate cut from the US Federal Reserve. Spot gold gained 0.3% to $2,466.33 per ounce, edging closer to its all-time high of $2,483.60 reached on Wednesday. US gold futures also rose 0.4% to $2,469.70.
Analysts expect long-term gains for gold, driven by the Fed’s anticipated rate cut and the belief that inflation is under control. Geopolitical instability and central bank demand are also contributing to a positive medium- to long-term outlook for gold.
The market is pricing in a 100% chance of a US rate cut in September, according to the CME FedWatch Tool. Gold’s appeal as a non-yielding asset shines in a low-interest-rate environment.
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While the number of Americans filing new unemployment claims increased, the overall labor market remains strong. However, the International Monetary Fund advocates delaying a rate cut until late 2024.
The European Central Bank maintained its interest rates, but President Christine Lagarde hinted at a potential move in September.
Meanwhile, some safehaven demand for gold is stemming from China due to negative rhetoric towards the country from both US presidential candidates.
Global physically backed gold exchange-traded funds recorded their second consecutive month of inflows in June, indicating investor confidence.