BENGALURU- Gold prices powered higher on Friday, beating record levels, as a boost in bullish momentum fueled by optimism that the US Federal Reserve is on the brink of trimming interest rates was catalyzed by fund inflows and a drop in the dollar.
Spot gold was trading at record levels, up 0.9 percent at $2,582.04 per ounce.
US gold futures settled 1.2 percent higher to $2,610.70.
Gold market bulls are locking in bullion prices surging to fresh records, with a milestone of $3,000 per ounce coming into focus, fired up by monetary easing by major central banks and a tight US presidential election race.
The stars are aligned in favor of the gold and silver market bulls as the European Central Bank lowered its main interest rate this week, the Fed is likely to lower it next week and tame US inflation data, Jim Wyckoff, senior market analyst at Kitco Metals, said.
Markets fully price a rate cut next week, with a 57 percent chance of 25-bps US rate cut and a 43 percent chance of a 50-bps cut, the CME FedWatch tool showed. This would be Fed’s first rate cut since 2020.
“The market is still expecting the Fed to cut interest rates by around 100 basis points by the end of the year, i.e. rates would have to be cut by 50 basis points at one of the two remaining meetings after September,” Commerzbank analysts said.
“It is therefore likely due to these aggressive interest rate cut expectations for the coming months that the gold price is rising.”
Further driving interest in bullion, the dollar fell on Friday to its lowest level this year against the Japanese yen.
Global physically backed gold exchange-traded funds saw a fourth consecutive month of inflows in August, the World Gold Council said last week.
