Gold prices are near record highs as markets digest the Federal Reserve’s dovish stance and prepare for Fed Chair Jerome Powell’s upcoming speech.
Further dovish comments could support gold prices, especially if the U.S. dollar remains weak.
The FOMC minutes suggest that a policy easing could occur in September, contingent on supportive economic data. Policymakers generally favour easing if the data aligns with projections. Market participants expect a total of 100 basis points in cuts by year-end.
The push for rate cuts has gained momentum following a significant downward revision of U.S. nonfarm payrolls. This revision raises concerns about the labour market’s ability to handle high interest rates, particularly after weaker payroll figures in July. As a result, the case for substantial Fed rate cuts this year has strengthened.
Looking ahead, today’s release of weekly initial jobless claims could also impact gold prices if it shows further softening in the labour market. Geopolitical tensions also continue to support gold, and with the U.S. elections approaching, political uncertainty might drive more investors towards gold as a safe haven.
