Gold prices are on the rise, marking a third consecutive gain, as traders anticipate the Federal Reserve will resume cutting interest rates. Easing inflation concerns and signs of a cooling labor market are fueling these expectations. Geopolitical tensions, particularly regarding the meeting between US and Russian Presidents, are also contributing to gold’s upward momentum.
- Gold prices climbed toward $3,370 per ounce.
- Traders increased bets on Federal Reserve interest rate cuts.
- The latest US CPI report eased tariff-driven inflation concerns.
- Signs of a cooling labour market added scope for further easing.
- Markets are almost certain of a 25 bps cut in September, with some positioning for a 50 bps move.
- Treasury Secretary Scott Bessent has urged multiple reductions, suggesting the Fed start with a half-point cut.
- Geopolitical risks ahead of the meeting between US President Donald Trump and Russian President Vladimir Putin provided support.
- Trump warned Russia would face “very severe consequences” if Putin refuses to end the Ukraine war.
The current environment is favorable for gold. Expectations of lower interest rates make gold, which doesn’t yield interest, a more attractive investment. Simultaneously, uncertainty surrounding geopolitical events boosts gold’s appeal as a safe-haven asset. These factors suggest continued upward pressure on gold prices.