(Bloomberg) -- Gold inched toward a fresh record after Federal Reserve Chair Jerome Powell affirmed expectations the central bank will start cutting interest rates next month.
Bullion traded above $2,500 an ounce, building on a 1.1% gain on Friday, when Powell said the “time has come” to pivot to monetary easing and made clear his intention to prevent further cooling in the US labor market. Lower borrowing costs typically increase the attractiveness of gold, which doesn’t pay interest, relative to Treasuries.
The precious metal has surged more than 20% this year in a blistering rally that’s been driven in part by optimism that the Fed was getting closer to its much-anticipated pivot. Haven demand due to heightened geopolitical risks and uncertainty ahead of the US election in November have added to the bullishness, as well as buying from central banks and Asian consumers.
Spot gold was up 0.2% at $2,516.86 as of 10:38 a.m. in New York after touching a record high of $2,531.75 last week. The Bloomberg Dollar Spot Index climbed 0.1%, after declining 1.2% last week. Palladium and platinum rose, while silver was steady.
It’s a data-heavy week in the US, which could alter expectations for how rapidly rates will be cut. Most notable is the personal consumption expenditures price index — the Fed’s preferred inflation measure — for July that will land on Friday. Investors will also be monitoring escalating tensions in the Middle East, after Israel launched a preemptive strike on Hezbollah targets in southern Lebanon over the weekend.
--With assistance from William Clowes and Yvonne Yue Li.
©2024 Bloomberg L.P.
