Gold Prices Rise Ahead of Federal Reserve Remarks
Gold prices increased on Monday, September 30, as the metal remained on track for its fourth consecutive quarterly gain. This rise is supported by expectations of a significant interest rate cut in the U.S. and ongoing tensions in the Middle East. Investors are eagerly awaiting comments from Federal Reserve Chair Jerome Powell.
As of 0036 GMT, spot gold was up 0.2% at $2,662.30 per ounce. The precious metal had closed 0.5% lower on Friday, breaking a six-session winning streak. Overall, gold prices have surged nearly 15% this quarter.
U.S. Economic Data Boosts Rate Cut Expectations
Recent data released on Friday showed that U.S. consumer spending increased moderately in August, indicating that the economy is maintaining solid momentum in the third quarter. Additionally, inflation pressures appear to be easing. This information has heightened expectations for a significant interest rate cut during the Federal Reserve’s upcoming meeting in November.
Currently, traders estimate a 53% chance of a half-percentage-point rate reduction at this meeting, according to the CME FedWatch Tool. Lower interest rates reduce the opportunity cost of holding gold, which is often seen as a safe haven during economic and political uncertainties.
Geopolitical Tensions Influence Market Sentiment
The recent killing of Hezbollah leader Sayyed Hassan Nasrallah in an Israeli airstrike in Beirut has intensified geopolitical tensions. This development poses a significant challenge for the Iran-backed group as it faces an ongoing campaign of Israeli attacks.
As market participants await speeches from Powell and Fed Governor Michelle Bowman later today, attention remains focused on how these comments may influence monetary policy.
Demand for Gold Weakens in Key Asian Markets
On the physical front, demand for gold has decreased in key Asian markets over the past week. Record-high prices have discouraged buyers and prompted some to sell their holdings. The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, reported a 0.59% decline in its holdings, now totaling 871.94 metric tonnes.
In related markets, spot silver rose 0.2% to $31.68 per ounce, platinum increased by 0.4% to $1,004.10, and palladium gained 0.2% to $1,013.50.
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