Expectations of a US interest rate cut at the monetary policy meeting scheduled for tomorrow, Tuesday, and the day after, shaped the trends in the precious metals and currency markets, as gold prices rose to their highest levels ever, while the dollar continued its decline against major currencies.
The US central bank meeting comes in a busy week of monetary policy meetings, with interest rate decisions also expected from the Bank of England and the Bank of Japan on Thursday and Friday.
Market speculation over the size of the Fed’s rate cut this week has shifted over the past month, driven by comments from Fed officials and economic data, with markets debating whether the central bank will respond to a weak labor market with an aggressive rate cut or whether it will take a slower approach and wait for more clues.
gold
Gold prices rose to an all-time high today, supported by a weaker dollar and expectations of a bigger-than-expected interest rate cut by the Federal Reserve this week.
Spot gold rose 0.43% to $2,587.34 per ounce at time of writing, after hitting an all-time high of $2,588.81 earlier in the session.
US gold futures rose 0.18% to $2,615.30 an ounce.
All eyes are on the US Federal Reserve this week, with speculation mounting about the extent of interest rate cuts at its monetary policy meeting tomorrow and the day after.
As for other precious metals:
- Spot silver rose 0.84% to $30.92 after hitting $30.95 an ounce in trading today, its highest level in two months.
- Platinum was steady at $995.20 an ounce after rising 0.5% to $1,000.35 an ounce earlier.
- Palladium rose 0.66% to $1,075.50 an ounce.
Currencies
In terms of currencies:
- The yen hit its highest level in more than a year in thin trading due to a holiday in Japan, driven by expectations of a U.S. rate cut.
Asian trading was slow, affected by holidays in Japan, China and South Korea.
The dollar fell 0.65 percent to 139.92 yen, further below its lowest level since late July last year. The dollar fell 1.3 percent against the yen last week.
- The pound rose 0.5% to $1.3185.
- The euro rose 0.45% to $1.1126.
- The dollar index fell 0.45% to 100.66 points.
The European Central Bank cut interest rates by 25 basis points last week, but its president, Christine Lagarde, has scaled back expectations of another cut next month.
