Gold Hits New Record Level Amid Increased Bets on US Interest Rate Cuts

SadaNews Economy - Gold prices surged to an unprecedented record level today, Tuesday, continuing their gains for the sixth consecutive session, supported by a weak dollar and increased bets on a reduction of US interest rates this month.

Gold rose in spot transactions by 0.6% to record $3495.01 an ounce, after previously reaching a historic level of $3508.50. US gold futures for December delivery also rose by 1.4% to reach $3565.90.

Kyle Rodda, a financial markets analyst at "Capital.com" told Reuters that "the weak economy and expectations for a cut in US interest rates provide strong support for precious metals." He added that "the escalating crisis of confidence in dollar assets due to US President Donald Trump's attack on the independence of the Federal Reserve represents another supporting factor for gold."

Trump had repeatedly criticized the Federal Reserve and its chairman Jerome Powell for not cutting rates, and recently attacked Powell over the high costs of renewing the bank's headquarters in Washington.

US Treasury Secretary Scott Peseant said yesterday that the council is independent and should remain so, but he added that the bank "has made many mistakes," and defended Trump's right to dismiss council member Lisa Cook on grounds of alleged fraud related to mortgage issues.

Market pricing currently shows that traders assign a 90% probability for the Fed to cut interest rates by 25 basis points on September 17, according to the "FedWatch" tool from the CME Group.

Gold, which does not yield returns, typically benefits in a low interest rate environment. The expectations for cuts, along with concerns about the Fed's independence, have pressured the dollar, which is trading near its lowest level in over a month against a basket of currencies, making gold less expensive for overseas buyers.

Official data released on Friday showed that the US Personal Consumption Expenditures Price Index rose by 0.2% month-on-month and 2.6% year-on-year, in line with market expectations.

Investors are now awaiting the release of US non-farm payroll data next Friday to gauge the expected level of interest rate cuts.

As for other precious metals, silver fell in spot transactions by 1.5% to $40.61 an ounce, after touching its highest levels since September 2011 in the previous session. Platinum rose by 1.6% to $1417.16, while palladium fell by 0.9% to record $1126.63.