Gold prices are higher today, following Federal Reserve Chair Jerome Powell’s statement that the organisation is awaiting “more good data” before opening the door to interest rate cuts.
In June, the Fed kept interest rates unchanged for the seventh time in a row, maintaining them at 5.25% and 5.5%— the highest in 23 years.
Speaking Tuesday morning at a Senate Banking Committee hearing, Powell stressed that the central bank wants to see further progress in bringing the annual inflation rate to about 2% before cutting rates, and stressed the agency’s concern regarding unemployment.
“Although Powell did not offer a timeline, his tone suggested it was a matter of ‘when’ instead of ‘if’ the Fed would slash rates this year,” said Vijay Valecha, Chief Investment Officer, Century Financial. “Markets see a good chance that the first rate cut could happen in September.”
Powell’s testimony had a direct impact on the price of gold.
“Following Powell’s Senate testimony, which suggests a cautious approach to rate cuts, gold prices jumped beyond $2,360,” said Mohamed Hashad, Chief Market Strategist, Noor Capital. “Although DXY gains 0.14%, the rate on the US 10-year Treasury increased to 4.296%.”
Gold prices in the UAE today are as follows:
24 Carat – Dh 286.75
22 Carat – Dh 265.50
21 Carat – Dh 257.00
18 Carat – Dh 220.25
According to data from the CME FedWatch Tool, investors are pricing in 70% odds of a Fed rate cut in September. December 2024 fed funds rate futures contract implies that the Fed will ease policy by 39 basis points (bps) toward the end of the year.
The World Gold Council (WGC) said that June saw a second month of inflows into gold exchange-traded funds (ETFs), with overall fund holdings increasing to 3,106 tons, an increase of almost 18 tons. June’s CPI report will be published on Thursday, which could impact gold’s movement.
