As of August 20th, gold prices maintained their position above the $2,500 threshold, supported by a weaker U.S. dollar and declining Treasury yields. Traders were eagerly anticipating the release of minutes from the Federal Reserve’s latest policy meeting for further insights on potential interest rate adjustments.
* Spot gold saw a slight uptick of 0.1%, reaching $2,505.92 per ounce by 0038 GMT. This followed a record high of $2,509.65 achieved on Friday.
* U.S. gold futures also experienced a modest increase of 0.1%, reaching $2,543.90.
* The depreciation of the U.S. dollar to a seven-month low in the prior session enhanced the attractiveness of gold for international buyers. Concurrently, benchmark 10-year Treasury yields exhibited a decline.
* Market expectations indicate the potential for U.S. rates to be reduced by 25 basis points during the remaining three 2024 meetings. Despite some economists downplaying concerns of a recession in a Reuters poll, a slight majority anticipate this rate cut.
* Traders are currently estimating a probability of approximately 75.5% for a 25 bps rate reduction, based on data from the CME FedWatch tool. The allure of non-yielding bullion is amplified in a low interest rate environment.
* Comments from Minneapolis Fed President Neel Kashkari allude to discussions of potential U.S. rate cuts in September, attributed to a possible weakening labor market as reported by the Wall Street Journal on Monday.
* Attention now shifts to the release of minutes from the Fed’s July policy meeting scheduled for Wednesday, as well as Chair Jerome Powell’s address on the U.S. economic outlook this Friday at the Jackson Hole symposium for additional guidance.
* In geopolitics, U.S. Secretary of State Antony Blinken emphasized the critical nature of reaching a ceasefire agreement in Gaza, referring to the latest diplomatic efforts by Washington as potentially the last opportunity for stakeholders to secure such a deal.
* Spot silver witnessed a slight decline of 0.3% to $29.39 per ounce, platinum recorded a 0.3% increase to $956.41, and palladium experienced a marginal decrease of 0.2% to $930.25.
DATA/EVENTS 0100 China Loan Prime Rate 1Y August 0100 China Loan Prime Rate 5Y August 0900 EU HICP Final MM July 0900 EU HICP Final YY July