Gold futures eyed another fresh record on further weakness in the US dollar and expectations that the Federal Reserve will slash interest rates next month. The yellow metal has been on a tear over the past month and has recorded 28 all-time high finishes in 2024.
December gold futures surged $8.30, or 0.33%, to $2,549.60 per ounce at 19:28 GMT on Tuesday on the COMEX division of the New York Mercantile Exchange. Gold prices have risen 6% this month and are up 23% year-to-date. Over the last 12 months, gold prices have rocketed more than 32%.
Silver, the sister commodity to gold, firmed above $29. September silver futures picked up $0.176, or 0.6%, to $29.48 an ounce. The white metal is up 0.6% in August and has rallied nearly 23% so far this year.
Further declines in the greenback fueled the continued momentum for gold on Tuesday. The US Dollar Index (DXY), a gauge of the greenback against a basket of currencies, declined 0.48% to 101.40, from an opening of 101.88. The DXY erased all of its year-to-date gains caused by a 3% monthly collapse.
A weaker buck is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.
The US dollar has slumped on the futures market penciling in rate cuts by the Federal Reserve this year. The US central bank is widely expected to pull the trigger on a quarter-point rate reduction in September, and investors expect one or two more rate cuts before the year is finished.
Of course, traders will be focused on the minutes from the Fed’s July policy meeting and Fed Chair Jerome Powell’s keynote speech at the annual Jackson Hole symposium.
Gold is sensitive to movements in interest rates because it can influence the opportunity cost of holding non-yielding bullion.
Additionally, there has been greater financial investment demand that has supported prices, says Aakash Doshi, head of commodities, North America at Citi Research.
“The primary drivers of the gold price move are financial investment demand, particularly with ETF buying improving and overall improved sentiment as the expectations of Fed easing cycle to begin in September,” Doshi said.
In other metal markets, September copper futures fell $0.025, or 0.6%, to $4.155 per pound. September platinum futures dropped $4.70, or 0.49%, to $958.20 an ounce. September palladium futures slid $2.30, or 0.25%, to $917.50 per ounce.