Gold prices dipped slightly on Tuesday as profit-taking ensued following a record high in the previous session. The surge was driven by expectations of additional interest rate cuts from the US Federal Reserve and robust safe-haven demand.
At 0456 GMT, spot gold slipped by 0.3 percent to $4,340.99 per ounce after reaching an unprecedented peak of $4,381.21 on Monday. Meanwhile, US gold futures for December delivery held steady at $4,357.80 per ounce.
Tim Waterer, Chief Market Analyst at KCM Trade, noted that profit-taking activities and a decrease in safe-haven flows contributed to the modest decline in gold prices today. He emphasized that any downturns in gold value would likely be perceived as buying opportunities given the Fed’s ongoing rate-cutting strategy.
Market expectations are currently pricing in a quarter-point rate reduction by the Fed this month, with another cut anticipated in December, as indicated by the CME FedWatch Tool. Gold, being a non-interest-bearing asset, typically performs well in a low-interest-rate environment.
Waterer expressed confidence in the continued upward momentum of the gold rally, contingent upon the release of US Consumer Price Index (CPI) data later in the week, which is anticipated to show a 3.1 percent year-over-year increase in September, according to Reuters’ economist survey.
The 20-day US government shutdown, now in effect, has hindered the timely release of crucial economic data, leaving stakeholders without vital information ahead of the upcoming Fed policy meeting.
In efforts to mitigate further escalations in US tariffs on Chinese goods, US Treasury Secretary Scott Bessent is scheduled to meet with Chinese Vice Premier He Lifeng in Malaysia this week. The aim is to address trade tensions and seek resolutions to avoid heightened trade conflicts.