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Gold Trims Gains as Traders Book Profit After Fresh Record

Gold Trims Gains as Traders Book Profit After Fresh Record
One kilogram gold bars at the ABC Refinery facility in Sydney, Australia, on Friday, May 3, 2024. Gold edged higher after mixed signals from the US, where optimism is growing the economy is on target for a soft landing as the Federal Reserve fights inflation.

Gold trimmed gains as traders booked profits after prices surged to a record on increasing optimism over the Federal Reserve’s monetary policy and rising geopolitical tensions in the Middle East.

 

Bullion was slightly higher in early New York trading on Monday after earlier jumping as much as 1.4% to hit $2,450.07, which surpassed a previous intraday high reached in April.

The metal eased off its high on profit-taking but the outlook remains positive and “new records could be on the way,” said Fawad Razaqzada, market analyst at City Index.

Traders have been boosting bets in recent sessions that the Fed may reduce borrowing costs as early as September, a scenario that would bolster gold since it doesn’t pay interest.

Gold Touches Fresh Record Amid Rate Cut Optimism | Geopolitical uncertainty also helping drive metal higher amid haven demand

A weaker dollar has provided the precious metal with additional support. Recent economic data releases indicated that the US economic recovery is slowing, which could lower inflation and reduce the need for prolonged tight monetary policy, according to Razaqzada.

Broader macroeconomic drivers are also at play for precious metals and other commodities such as copper. “China’s various stimulus measures have bolstered demand or perceived demand for commodities, and we’ve seen improvements in eurozone and UK data,” said Razaqzada.

Gold’s haven status was in the spotlight after news that Iran’s President Ebrahim Raisi, widely seen as a candidate to become the country’s next supreme leader, was killed in a helicopter crash on Sunday. His death, along with that of Foreign Minister Hossein Amirabdollahian, came at a time of turmoil in Middle East due to the Gaza war. The incident adds a sense of rising geopolitical risks across the region after a China-bound oil tanker was hit by a Houthi missile in the Red Sea on Saturday.

Hedge funds trading Comex futures boosted bullish bets on gold to a three-week high in the week ending May 14, according to data from the Commodity Futures Trading Commission.

The gains suggest that bullion has broken out of what’s been a fairly narrow trading range in recent weeks amid a lack of clarity over the US rate path. Prices are about 17% higher this year.

Gold’s strength has been linked to central-bank purchases, robust demand from Asia — especially China — and elevated geopolitical tensions in Ukraine and the Middle East.

Spot gold was up 0.1% to $2,417.51 an ounce as of 10:13 a.m. in New York. Silver, meanwhile, was marginally higher after earlier climbing to the highest since December 2012.

Read More: Hot Commodity Silver Outpaces Gold as Buying Gains Momentum

A strong rally in silver on Friday was helped by spillover sentiment in wider physical metals markets, where tightening supply has spurred investor demand for materials such as copper. Unlike gold, the white metal is also considered an industrial commodity given its usage in products such as solar panels. Palladium rose, while platinum fell.

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