By Rahul Paswan and Brijesh Patel
(Reuters) – Gold prices rose more than 1% to a record high on Tuesday, as investors flocked to the safe-haven asset after comments from Federal Reserve officials cemented expectations of a U.S. interest rate cut in September.
Spot gold gained 1.3% to $2,452.29 per ounce by 11:01 a.m. ET (1501 GMT). U.S. gold futures for August delivery rose 1.2% to $2,457.20 per ounce.
“We’re right now at 100% probability of a cut in September and Federal Reserve Chair Jerome Powell’s comments yesterday are driving the gold market up,” said Bart Melek, head of commodity strategies at TD Securities.
Powell said at an event on Monday that recent inflation data bolstered policymakers’ confidence that price pressures are on a sustainable path to remain low.
San Francisco Federal Reserve Bank President Mary Daly on Monday also said that “confidence is growing” that inflation is heading toward the U.S. central bank’s 2% goal, the bar that policymakers have set for cutting interest rates.
Lower U.S. interest rates put pressure on the dollar and bond yields, increasing the appeal of non-yielding bullion.
“We’ll see two interest rate cuts, one in September and one in December, as the expectations for the interest rate cut in September has gone up to 100%,” said Phillip Streible, chief market strategist at Blue Line Futures.
The benchmark 10-year Treasury yield was hovering near a four-month low. [US/]
Among other metals, spot silver edged 0.1% higher to $31.05 per ounce, platinum lost 0.2% to $992.63 and palladium rose 0.8% to $958.
(Reporting by Rahul Paswan, Anushree Mukherjee and Brijesh Patel in Bengaluru; Editing by Krishna Chandra Eluri)
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