Gold futures in New York closed up nearly 1.2% on Friday, August 23, as the dollar and bond yields fell after comments from Federal Reserve Chairman Jerome Powell indicated that the Fed will cut interest rates in September.
Gold futures on the US Comex index closed up 1.2% at $2,546.30 an ounce.
Meanwhile, spot gold prices rose 1.2% to $2,512.63 per ounce. At around 12:44 a.m. today, the price was still below the record high of $2,531.60 per ounce on Tuesday, August 20.
“It's time for the Fed to cut rates,” Powell said at a conference in Jackson Hole, Wyoming, on Friday. “Inflation is approaching the Fed's 2% target, which is a clear sign that the Fed will cut rates soon.”
Supportive factors for gold prices also came from the dollar index, which fell by 0.8% against other major currencies. In the currency basket, meanwhile, the yield on the 10-year US Treasury note fell by 0.059% to 3.803%.
Typically, a cut in U.S. interest rates would also boost the price of gold, which is a non-interest bearing asset, and Alex Ibgarian, chief operating officer at Allegiance Gold, said a Fed rate cut next month could send gold higher. Gold would rise to between $2,550 and $2,600.
Traders are pricing in a 59.5% chance that the Fed will cut rates by 0.25% in September, while there is a 40.5% chance of a 0.50% cut. The market is pricing in a 0.5% rate cut more than ever.
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