LONDON, Sept 5 (Reuters): Gold rose on Thursday fuelled by expectations of a deeper U.S. Federal Reserve rate-cutting cycle, which is widely expected to start this month.
Spot gold was up 0.9 per cent at $2,516.18 per ounce by 0926 GMT. The bullion hit a record high of $2,531.60 on Aug. 20.
Gold is supported by a global economic slowdown "that has raised the downside risk across growth-dependent commodities" and also "lifted the prospect for a more aggressive rate-cutting cycle," said Ole Hansen, head of commodity strategy at Saxo Bank.
Data released on Wednesday showed that US job openings dropped to a 3-1/2-year low in July, suggesting the labour market was losing steam.
Traders have fully priced in a Fed easing for next month, with a 57 per cent chance of a 25-basis-point cut and an about 43 per cent chance of a bigger 50-bp reduction, compared with 65.5 per cent and 34.5 per cent last week, respectively, according to the CME FedWatch tool.
The widely expected cut has prompted physically backed gold exchange-traded funds (ETFs) to resume purchases in recent months. This comes after years of outflows when Western safe-haven seekers chose the U.S. Treasury bond market, where yields were high instead of non-yielding gold.
"Now the big question is of course how low the rates are going to go, or how low the yields will go," said Carsten Menke, an analyst at Julius Baer.
"If the Fed cuts the rates, the interest rates will still remain in the restrictive territory - above the neutral rate, and based on that, we don't think that this is going to cause a big wave of buying by Western gold investors."
The precious metal is up 22 per cent so far this year, heading for the biggest annual growth since 2020, amid bets on upcoming U.S. rate cuts, safe-haven demand driven by geopolitical and economic uncertainty, and robust purchases by central banks.
Julius Baer keeps its three- and twelve-month price targets for gold unchanged at $2,500 and $2,600 per ounce, respectively.
Spot silver gained 1.6 per cent to $28.73, platinum climbed 2.1 per cent to $921.53 and palladium rose 0.9 per cent to $942.13.
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