On Tuesday (Jul 16), gold prices saw a modest increase following remarks from Federal Reserve chair Jerome Powell that reinforced expectations of an upcoming rate cut in September. Investors remained attentive to forthcoming US economic data as they sought further guidance on future monetary policy decisions.
The price of spot gold edged up by 0.1 percent to reach US$2,423.89 per ounce as of 0140 GMT. Monday’s trading session saw gold prices reaching their highest level since May 20, touching US$2,449.89.
Meanwhile, US gold futures held steady at US$2,429.90.
According to IG market strategist Yeap Jun Rong, “Powell continued to lay the groundwork for upcoming policy easing. A rate cut in September is now fully priced in by markets, which may keep sentiments in gold prices well-supported in the lead-up.”
In his remarks on Monday, Powell acknowledged that recent US inflation figures for the second quarter of the year “add somewhat to confidence” that inflation is moving back toward the Fed’s target in a sustainable manner. These comments suggest that a reduction in interest rates may be imminent.
Historically, when interest rates decline, the appeal of non-yielding assets like gold tends to increase.
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