Gold holds ground above $2,500 on weaker dollar; markets await Fed minutes

Gold prices held above the $2,500 mark on Tuesday, buoyed by a weaker U.S. dollar and Treasury yields, while traders awaited minutes of the Federal Reserve’s last policy meeting for further cues on interest rate cuts.

FUNDAMENTALS

* Spot gold edged 0.1% higher to $2,505.92 per ounce by 0038 GMT. Prices had hit an all-time high of $2,509.65 on Friday.

* U.S. gold futures rose 0.1% to $2,543.90.

* The U.S. dollar fell to a seven-month low in the previous session, making gold more appealing for the overseas buyers. Benchmark 10-year Treasury yields also slipped.

* The Fed is expected to cut rates by 25 basis points at each of the three remaining 2024 meetings, with a slim majority of Reuters-polled economists dismissing recession concerns.

* Traders are currently pricing in about a 75.5% chance of a 25 bps cut, according to CME FedWatch tool. A low interest rate environment tends to boost non-yielding bullion’s appeal.
* Minneapolis Fed President Neel Kashkari said it was appropriate to discuss potentially cutting U.S. rates in September because of the rising possibility of a weakening labor market, the Wall Street Journal reported on Monday.
* The market is now looking ahead to the minutes of the Fed’s July policy meeting due on Wednesday, and Chair Jerome Powell‘s speech on the U.S. economic outlook this Friday at the Jackson Hole symposium for further cues.

* On the geopolitical front, U.S. Secretary of State Antony Blinken on Monday said the latest diplomatic push by Washington to achieve a ceasefire deal in Gaza was “probably the best, maybe the last opportunity” and implored all stakeholders to get the agreement over the finish line.

* Spot silver fell 0.3% to $29.39 per ounce, platinum gained 0.3% to $956.41 and palladium shed 0.2% to $930.25.

DATA/EVENTS (GMT) 0100 China Loan Prime Rate 1Y August 0100 China Loan Prime Rate 5Y August 0900 EU HICP Final MM July 0900 EU HICP Final YY July