Non-yielding gold thrives in a low-interest-rate environment and during economic uncertainties
[BENGALURU] Gold prices rose to an all-time high on Tuesday (Oct 7), extending gains to a third session on US economic and political uncertainties and expectations of further interest rate cuts by the US Federal Reserve.
Spot gold held its ground at US$3,961.64 per ounce, as at 8.55 am, after hitting a fresh high of US$3,977.19 earlier in the session.
US gold futures for December delivery gained 0.2 per cent to US$3,985.50.
The White House on Monday backed off from US President Donald Trump’s assertion that government employees were already being laid off due to the shutdown, but warned job losses could result as the standoff looked set to stretch into a seventh day.
Kansas City Fed Bank president Jeff Schmid signalled he is disinclined to cut interest rates further, arguing that as the Fed navigates between the twin risks of overly tight and overly easy policy, it should stay focused on the danger of too-high inflation.
However, markets are pricing in an additional 25-basis-point rate cuts in both October and December, with probabilities of 95 per cent and 83 per cent, respectively, according to the CME FedWatch tool.
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Non-yielding gold thrives in a low-interest-rate environment and during economic uncertainties.
Gold has climbed 51 per cent so far this year on strong central bank buying, increased demand for gold-backed Exchange-Traded Fund (ETFs), a weaker US dollar and growing interest from retail investors seeking a hedge amid rising trade and geopolitical tensions.
SPDR Gold Trust, the world’s largest gold-backed ETF, said that its holdings fell 0.17 per cent to 1,013.2 tonnes on Monday from 1,014.9 tonnes on Friday.
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Elsewhere, spot silver eased 0.4 per cent to US$48.32 per ounce, platinum fell 0.8 per cent to US$1,612.85, and palladium lost 0.3 per cent to US$1,315.86. REUTERS
