Gold rises more than 1pc on safe-haven demand

FE Team | Published: August 08, 2024 21:35:14

Gold prices rose more than 1 per cent on Thursday, supported by firm safe-haven demand and growing expectations for a sizeable interest rate cut from the US Federal Reserve in September, reports Reuters.
Spot gold rose 1.3 per cent to $2,413.19 per ounce by 1338 GMT, on track to snap a five-session losing streak. US gold futures were up 0.8 per cent at $2,452.20.
"What gold is benefiting from is just providing more stability and more investors are seeing that... it's just migration from risk assets to more of a safe-haven asset," said Alex Ebkarian, chief operating officer at Allegiance Gold.
"Gold's outlook remains stronger, but we are experiencing more and more volatility, and depending on the impact of rate cuts, if the Fed comes out and does 1/2 percent rate cut, then we anticipate a lot more rallying in the metals market."
On the geopolitical front, the killing of senior members of militant groups Hamas and Hezbollah last week raised the possibility of retaliatory strikes by Iran on Israel.
Bullion is considered a hedge against geopolitical and economic uncertainties and tends to thrive in a low-interest-rate environment.
Brokerages including J.P. Morgan, Citigroup and Wells Fargo have forecast a 50-basis-point interest rate cut by the Fed in September after last week's US jobs data.
Market see a 72 per cent chance of 50 basis points cut in September, up from 70 per cent on Monday, according to the CME FedWatch Tool, with an additional cut anticipated in December.
US data showed there were 233,000 initial jobless claims last week, below the 240,000 expected by economists and down from 250,000 the week before, easing worries of a slowdown in the world's largest economy.
Gold prices fell as much as 3 per cent on Monday, caught in a global sell-off driven by fears of a US recession.
Elsewhere, spot silver rose 1.8 per cent to $27.09 per ounce, platinum was up 0.8 per cent at $926.90 and palladium gained 2.6 per cent to $906.