Gold prices hover near record highs on Fed’s aggressive rate stance

Gold prices hovered near record highs on Monday, as traders embraced the momentum generated by the U.S. Federal Reserve‘s bold interest rate cut and signs that further reductions were on the horizon.

FUNDAMENTALS

* Spot gold steadied near $2,619.37 per ounce, as of 0025 GMT, trading near a record high hit on Friday.

* U.S. gold futures edged 0.1% lower to $2,643.90.

* The U.S. Fed began easing monetary policy with a half-percentage-point rate cut on Wednesday, forecasting a further half-point reduction by year-end, a full point next year, and an additional half point in 2026. * After the Federal Reserve’s recent half-percentage-point interest rate cut, officials expressed differing views on the decision. One governor argued that weak inflation warranted the large reduction, while another felt that persistent price pressures justified a smaller cut.
* Traders are currently pricing about a 51% chance of a 50-basis-point reduction in November and a 49% chance of a 25-bp cut, according to the CME FedWatch tool.
* Zero yield bullion tends to be a preferred investment in a lower interest rate environment and during geopolitical turmoil.
* On the geopolitical level, Hezbollah and Israel exchanged heavy fire into Sunday, with the Lebanese militant group launching rockets deep into northern Israel amid intense bombardment, marking one of the most significant escalations in nearly a year of conflict.

* For this week, traders will be looking forward to PCE inflation data from the United States due on Friday.

* In terms of physical demand, gold demand in India slightly improved last week but remained well below normal levels due to record-high prices, while discounts in China widened.

* Elsewhere, the Bank of Japan kept interest rates steady on Friday and its governor said it could afford to spend time eyeing the fallout from global economic uncertainties, signalling it was in no rush to raise borrowing costs further.

* Spot silver was down 0.2% to $31.06 per ounce, platinum fell 0.8% to $967.81 and palladium shed 1.3% to $1,053.67.

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