Gold hovers near record high on safe-haven demand, US rate-cut bets

[BENGALURU] Gold prices edged higher on Tuesday (Oct 21) to hover near all-time highs, as strong safe-haven demand and hopes of further interest rate cuts from the US Federal Reserve boosted demand for the precious metal.

Spot gold was up 0.2 per cent at US$4,363.58 per ounce, as at 9.06 am, having hit a record high of US$4,381.21 on Monday.

US gold futures for December delivery added 0.5 per cent to US$4,379 per ounce.

The US government shutdown stretched to its 20th day on Monday, after senators failed for the tenth time last week to break the impasse. White House economic adviser Kevin Hassett said on Monday the shutdown was likely to end this week.

The shutdown has delayed key economic data releases, leaving investors and policymakers in a data vacuum ahead of the Federal Reserve’s policy meeting next week.

Markets are fully pricing in for a quarter-point Fed rate cut this month, and another one in December, according to the CME FedWatch Tool. Gold, a non-yielding asset, tends to do well in a low interest rate environment.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 1.09 per cent to 1,058.66 tonnes on Monday from 1,047.21 tonnes on Friday.

Investors now look forward to US consumer price index data scheduled for release on Friday. The data has been delayed due to the shutdown.

Economists polled by Reuters estimate the index rose 3.1 per cent on a year-over-year basis in September, an acceleration from the month before and a number likely to keep alive some policymakers’ concerns about the wisdom of cutting rates any further.

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Elsewhere, spot silver eased 0.3 per cent to US$52.29 per ounce, platinum gained 0.3 per cent to US$1,643.48 and palladium gained 0.6 per cent to US$1,504.72 per ounce. REUTERS