By Daksh Grover
Gold prices remained flat near their all-time high on Tuesday, with investors eagerly anticipating the release of the U.S. Federal Reserve minutes and Chair Jerome Powell's speech for insights into potential rate cuts.
At 0514 GMT, gold was trading at $2,503.05 per ounce, just below the record high of $2,509.65 reached on Friday. Meanwhile, U.S. gold futures were nearly unchanged at $2,540.90.
"Gold prices have shown stability in the Asian session, with buyers defending the new record high," said IG market strategist Yeap Jun Rong. "The overall upward trend for gold remains strong, with potential for prices to target the $2,665 level from a technical standpoint."
This year, gold prices have surged over 20%, driven by expectations of Fed rate cuts starting in September, robust central bank purchases, and safe-haven demand amid tensions in the Middle East.
With non-yielding gold becoming more attractive in a low interest rate environment, the Fed is anticipated to lower rates by 25 basis points at each of the remaining three meetings in 2024. Most economists in a Multibagger poll are not overly concerned about a recession.
"The decision to cut rates will hinge on whether incoming economic data supports the recent softening in key indicators," explained Ole Hansen, head of commodity strategy at Saxo Bank.
Traders are eagerly awaiting the Fed's July meeting minutes on Wednesday and Powell's speech at the Jackson Hole symposium on Friday for further guidance.
The weakening U.S. dollar has provided support for dollar-denominated gold, while holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to their highest level in seven months at 859 tonnes on Monday.
In the broader metal market, spot silver dipped 0.4% to $29.36 per ounce, platinum gained 0.4% to $957.08, and palladium dropped 0.7% to $925.47.
Analysis:
The current state of the gold market has been driven by various factors, including expectations of Fed rate cuts, geopolitical tensions, and a weakening U.S. dollar. As an investor, it's important to monitor central bank policies and economic data to gauge the future direction of gold prices. With the potential for further rate cuts and ongoing geopolitical uncertainties, gold remains an attractive asset for investors seeking a safe haven in turbulent times. Consider diversifying your portfolio with gold to hedge against market volatility and potentially capitalize on future price movements.