Gold prices hold steady after rally amid prospects of deeper Fed Rate cuts

Gold prices held steady after a 1% surge in the previous session, driven by weak U.S. economic data that heightened expectations for more aggressive interest rate cuts by the Federal Reserve.

Bullion hovered around $2,660 per ounce, just shy of a record high it set yesterday following a report that revealed the sharpest decline in U.S. consumer confidence in three years. This slump has pressured both the dollar and Treasury yields, enhancing the appeal of gold.

Silver also surged, reaching its highest level since May with a 4.6% gain—its largest single-day increase in four months.

Traders are now betting on the Fed slashing rates by more than three-quarters of a percentage point this year, suggesting an additional 50 basis point cut could be on the horizon.

Lower interest rates tend to favor gold, which offers no yield, while a weaker dollar makes the precious metal more affordable for international buyers.

Gold has now climbed nearly 30% this year, with momentum picking up after the Fed’s half-point rate cut last week.

Prices have been further supported by strong central bank purchases and rising geopolitical tensions, which have driven investors towards safe-haven assets like gold.

With less than six weeks until the U.S. presidential election, a highly competitive race is contributing to market uncertainty and could have a significant impact on financial markets.

As of 8:15 a.m. in Singapore, spot gold was steady at $2,658.10 per ounce, after reaching an all-time high of $2,664.39 yesterday.

The Bloomberg Dollar Spot Index slipped 0.1% following a 0.5% decline in the previous session. Prices of silver, platinum, and palladium experienced only minor fluctuations.

Investors are now closely monitoring upcoming U.S. data releases, including the Personal Consumption Expenditures (PCE) Index and unemployment claims, due later this week, for further insights into the Fed’s potential easing trajectory.