Gold pauses after record rally on safe-haven demand

Markets are pricing in an additional 25-basis-point cut each in October and December

Gold eased on Thursday (Oct 9), as investors booked profits a day after bullion breached the crucial US$4,000-per-ounce level to hit a record high on economic and geopolitical uncertainties and hopes of additional US interest rate cuts.

Spot gold fell 0.4 per cent to US$4,021.99 per ounce as at 9.17 am, after hitting a record high of US$4,059.05 on Wednesday.

US gold futures for December delivery fell 0.7 per cent to US$4,042.60.

US Federal Reserve officials agreed that risks to the US job market had risen enough to warrant a rate cut, but remained cautious amid persistent inflation and debate over how much borrowing costs are weighing on the economy, minutes of the Sep 16 to 17 meeting showed on Wednesday.

Markets are pricing in an additional 25-basis-point cut each in October and December, with probabilities of 95 per cent and 83 per cent, respectively, per the CME FedWatch tool.

Non-yielding gold thrives in a low-interest-rate environment and during economic uncertainties.

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Markets this week have grappled with political turmoil in Japan and France alongside an ongoing US government shutdown, all of which have done little to stoke confidence in investors, who have sought safety in gold.

Gold has climbed 54 per cent year to date on strong central bank buying, increased demand for gold-backed Exchange-Traded Fund (ETFs), a weaker US dollar and growing interest from retail investors seeking a hedge amid rising trade and geopolitical tensions.

SPDR Gold Trust, the world’s largest gold-backed ETF, said its holdings rose 0.14 per cent to 1,014.58 tonnes on Wednesday from 1,013.15 tonnes on Tuesday.

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Elsewhere, spot silver added 0.1 per cent to US$48.91 per ounce, after hitting an all-time high of US$49.57 on Wednesday. Platinum slipped 0.7 per cent to US$1,650.60 and palladium dropped 1 per cent to US$1,435.25. REUTERS