Gold subdued after record run as traders await cues from Fed

Gold subdued on Monday after piercing the USD 2,500 ceiling in the previous session, as investors booked profits from the record run and positioned for more cues from the US Federal Reserve and developments in the Middle East.

Spot gold was down 0.2% at USD 2,501.74 per ounce as of 01:41 p.m. ET (1741 GMT), shy of the record high of USD 2,509.65 hit on Friday. US gold futures settled 0.1% higher at USD 2,541.30.

“We will not be surprised to see some consolidation/pull-back in the gold market as traders may be disappointed if the Fed only indicates a likelihood of a 0.25 bp rate cut and does not hint at the possibility of a larger 0.50 bp cut,” David Meger, director of alternative investments and trading at High Ridge Futures, said.

Traders see a 77.5% chance of the Fed cutting interest rates by 25 basis points (bps) in September, according to the CME FedWatch Tool.

The focus will turn to minutes from the Fed’s last policy meeting on Wednesday and Chair Jerome Powell’s speech at an economic symposium in Jackson Hole on Friday.

Gold may fall into the USD 2,479-USD 2,487 range following its failure to break resistance at USD 2,507, according to Reuters technical analyst Wang Tao.

But UBS analyst Giovanni Staunovo said gold could rise further in the coming months, likely reaching USD 2,600/oz by end-year, adding all eyes will be on any indication of an imminent rate cut from Powell.

On the physical front, several Chinese banks have been given new gold import quotas from the central bank, anticipating revived demand despite record-high prices.

Gold demand is strong as geopolitical tensions, particularly from the Israel-Iran-Hamas conflict, drive safe-haven buying, Achilleas Georgolopoulos, investment analyst at forex broker XM, wrote in a note.

Silver rose 0.8% to USD 29.24 per ounce. Platinum gained 0.3% to USD 957.57, while palladium shed 2.1% to USD 930.92.

(Reporting by Anushree Mukherjee and Sherin Elizabeth Varghese in Bengaluru; Editing by Alan Barona, Barbara Lewis, and Shreya Biswas)