Gold stays near record high on Middle East risks, softer US dollar

GOLD prices were steady near record highs on Wednesday (Sep 25), as a weaker US dollar and an escalated conflict in the Middle East lifted bullion’s safe-haven appeal, while investors braced themselves for new signals on the US interest rate trajectory.

Spot gold held its ground at US$2,658.07 per ounce, as at 0016 GMT. Bullion hit a record high of US$2,664.25 on Tuesday.

US gold futures edged 0.2 per cent higher to US$2,682.60.

The US dollar was down 0.2 per cent, making greenback-priced bullion less expensive for other currency holders.

Data on Tuesday showed that US consumer confidence in September dropped by the most in three years amid mounting fears over the labour market, though more households planned to buy a home over the next six months.

The data raised hopes that the US Federal Reserve could do another outsized rate cut at its November policy meeting.

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Currently, Fed futures traders have priced in 75 basis points in rate cuts by the end of this year, according to CME FedWatch.

Zero-yield bullion tends to be a preferred investment in a low-interest-rate environment and during geopolitical turmoil.

Fed governor Michelle Bowman said on Tuesday that key measures of inflation remain “uncomfortably above” the US central bank’s 2 per cent target, warranting caution as the Fed proceeds with cutting interest rates.

On the geopolitical front, the Israeli airstrike on Beirut killed a senior Hezbollah commander on Tuesday as cross-border rocket attacks by both sides increased fears of a full-fledged war in the Middle East and Lebanon.

Traders’ attention will now turn towards Fed governor Adriana Kugler speech due later in the day.

Inflows to gold exchange-traded funds, particularly from Western investors, are set to rise in coming months, adding yet more positive stimulus for already record-high bullion prices, analysts said.

Spot silver was steady at US$32.11 per ounce, platinum rose 0.4 per cent to US$989.60 and palladium shed 0.2 per cent to US$1,054.75. REUTERS