Gold notches fresh high on safe-haven demand, Fed rate-cut bets

Gold prices rose to an all-time high on Tuesday, extending gains to a third session on US economic and political uncertainties and expectations of further interest rate cuts by the Federal Reserve.

FUNDAMENTALS

* Spot gold held its ground at USD 3,961.64 per ounce, as of 0055 GMT, after hitting a fresh high of USD 3,977.19 earlier in the session.

* US gold futures for December delivery gained 0.2% to USD 3,985.50.

* The White House on Monday backed off President Donald Trump’s assertion that government employees were already being laid off due to the shutdown, but warned job losses could result as the standoff looked set to stretch into a seventh day.

* Kansas City Fed Bank President Jeff Schmid signaled he is disinclined to cut interest rates further, arguing that as the Fed navigates between the twin risks of overly tight and overly easy policy, it should stay focused on the danger of too-high inflation.

* However, markets are pricing in an additional 25-basis-point rate cuts in both October and December, with probabilities of 95% and 83%, respectively, according to the CME FedWatch tool

* Non-yielding gold thrives in a low-interest-rate environment and during economic uncertainties.

* Gold has climbed 51% so far this year on strong central bank buying, increased demand for gold-backed Exchange-Traded Fund (ETFs), a weaker dollar and growing interest from retail investors seeking a hedge amid rising trade and geopolitical tensions.

* SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.17% to 1,013.16 metric tons on Monday from 1,014.88 tons on Friday.

* Elsewhere, spot silver eased 0.4% to USD 48.32 per ounce, platinum fell 0.8% to USD 1,612.85 and palladium lost 0.3% to USD 1,315.86.

(Reporting by Brijesh Patel in Bengaluru; Editing by Subhranshu Sahu)