Spot Gold held in proximity to an all-time high of $3,790.82/oz. on Wednesday, as market players weighed Federal Reserve Chair Jerome Powell’s remarks on interest rate cuts.
Yesterday Powell stated the US central bank had to continue balancing the competing risks of high inflation and a weakening job market in its future policy decisions.
The Fed lowered its federal funds rate target range by 25 basis points to 4.00%-4.25% at its September meeting.
Markets are now pricing in about a 93% chance of a 25 basis point Fed rate cut in October and a 77% chance of another 25 bps cut in December.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
On the geopolitical front, NATO warned Russia it would use “all necessary military and non-military tools” to defend itself, while condemning Moscow for violating Estonia’s airspace in a “pattern of increasingly irresponsible behavior.”
Spot Gold was last up 0.28% on the day to trade at $3,774.70 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Year-to-date, the yellow metal has surged 43.84%.
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