Gold Rises to Fresh Record Before Data That May Offer Fed Clues
(Bloomberg) -- Gold rose to fresh all-time high as traders digested data and remarks from policymakers while awaiting a slew of key economic readings that may offer clues on the scope of further easing by the Federal Reserve.
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A handful of Federal Reserve officials on Monday left open the door to additional interest-rate cuts, noting that current rates still weigh heavily on the US economy.
“Over the next 12 months, we have a long way to come down to get the interest rate to something like neutral to try to hold the conditions where they are,” Chicago Fed President Austan Goolsbee said in a moderated Q&A event. Minneapolis Fed President Neel Kashkari meanwhile said he expects to lower interest rates by smaller, quarter-point moves at each of the central bank’s two remaining meetings this year.
Earlier Monday, data showed US business activity expanded at a slightly slower pace in early September, while expectations deteriorated and a gauge of prices received climbed to a six-month high.
Bullion rose as much as 0.5% to a record $2,634.90 an ounce, beating the previous all-time high posted on Friday. Gold has advanced since the Fed lowered its benchmark interest rate by half a percentage point last week, building on what was already a record-setting year for the precious metal.
After scrutinizing the comments from Monday’s Fed speakers, traders will turn their attention to US personal consumption data and jobless claims later in the week. Those could inform the central bank’s thinking on future rate cuts, which are often seen as positive for non-interest bearing gold.
“The market looks increasingly in need of consolidation, but at this point, a deep one is needed to rattle hedge funds holding the largest bet on higher prices since 2020,” according to a report from Saxo Bank A/S.
Bullion’s 27% rally this year has also been supported by robust purchasing by central banks and haven demand amid ongoing conflicts in the Middle East and Ukraine.
For Michael Cuggino, president at Permanent Portfolio Family of Funds, these bullish factors will help gold continue to trend higher over the long term despite some choppiness in prices in the near term. The firm’s Permanent Portfolio fund is currently above a target weighting of 20% and the company is “not changing our allocation at this time.”
Spot gold was up 0.2% at $2,626.99 an ounce by 2:54 p.m. in New York. The Bloomberg Dollar Spot Index was little changed, while the US 10-year Treasury yield edged lower. Palladium, platinum and silver all fell.