Gold prices rise as dollar yields, Treasury bonds fall after Powell’s signal to cut interest rates

(MENAFN) Gold prices increased by 1 percent, reaching USD2,508.88 per ounce, as both the U.S. dollar and Treasury yields fell in response to Federal Reserve Chairman Jerome Powell’s indication of a possible interest rate cut in September. Despite the rise, gold prices remained below the record high of USD2,531.60 set earlier in the week. U.S. gold futures also saw a rise, climbing 1.2 percent to USD2,546.20. Powell’s comments, which suggested that the Federal Reserve is ready to reduce rates and noted that inflation is nearing the central bank’s 2 percent target, have reinforced expectations for a forthcoming monetary policy adjustment.

The dollar index dropped by 0.6 percent, and benchmark 10-year Treasury yields decreased following Powell’s speech, which made gold more appealing to investors holding other currencies. According to Tai Wong, an independent metals trader in New York, the asset markets are reacting positively to Powell’s hint at a policy shift, with gold anticipated to continue its ascent ahead of the Fed’s September meeting. Alex Epkarian, COO at Allegheny Gold, forecasted that expectations of a rate cut could drive gold prices to a range of USD2,550 to USD2,600.

The CME Group’s FedWatch tool indicates a 67.5 percent probability of a 25 basis point rate cut next month, with a 32.5 percent chance of a larger 50 basis point reduction. In addition to gold, other precious metals also saw gains: silver increased by 2.1 percent to USD29.60 per ounce and experienced a similar weekly rise; platinum rose 1.5 percent to USD958.35; and palladium climbed 1.6 percent to USD947.50.