Gold scales new high as dollar weakens ahead of Fed meeting

Gold prices scaled a record peak on Tuesday, supported by a weaker dollar ahead of the Federal Reserve’s policy meeting this week, where the central bank is widely expected to cut borrowing rates.

FUNDAMENTALS

* Spot gold rose 0.1% to USD 3,680.17 per ounce as of 0109 GMT, after hitting a record high of USD 3,689.27 earlier in the session.

* US gold futures for December delivery were flat at USD 3,718.80.

* The dollar traded near a 2-1/2-month low against the euro and close to a 10-month trough versus the risk-sensitive Aussie. A weaker greenback makes gold less expensive for other currency holders.

* US President Donald Trump in a social media post on Monday called for Fed Chair Jerome Powell to enact a “bigger” cut to benchmark interest rates.

* Traders are pricing in a near-certain 25-basis-point (bps) rate cut at the end of the two-day meeting on September 17, with a small chance of a 50 bps reduction, per the CME FedWatch tool.

* Lower interest rates reduces the opportunity cost of holding non-yielding bullion.

* SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund (ETF), said its holdings rose 0.21% to 976.80 tonnes on Monday from 974.80 tonnes on Friday.

* Meanwhile on Monday, a US appeals court refused to allow Donald Trump to fire Fed Governor Lisa Cook – the latest step in a legal battle that threatens the Fed’s longstanding independence.

* Elsewhere, spot silver held steady at USD 42.71 per ounce, platinum eased 0.1% to USD 1,399.40 and palladium gained 0.4% to USD 1,188.59.

(Reporting by Brijesh Patel in Bengaluru; Editing by Sumana Nandy)