Spot gold gained 0.3% to $2,630.19 an ounce by 11:37 a.m. ET (1537 GMT), after hitting a record high of $2,635.29 earlier in the session.
“The market is still reacting to the Fed’s 50 basis point rate cut last Wednesday… the US central bank has signalled that it is not particularly concerned about inflation and will do everything it can to ensure that unemployment is not a problem in the US,” said Bart Melek, head of commodity strategies at TD Securities.
The Fed is not, however, in a “mad dash” toward a neutral interest rate as policymakers engage in a “robust” debate over how far and fast rates should fall, Atlanta Federal Reserve President Raphael Bostic said.
“If employment rates plummet, that would lead the market to believe that the Fed could become much more aggressive on the cutting side, which is very helpful for gold,” Melek said, adding that a situation of regional instability in the Middle East could also further boost gold’s rally.
Israeli Prime Minister Benjamin Netanyahu said Israel faced “difficult days” as it stepped up attacks on Hezbollah in southern Lebanon and called on Israelis to remain united as the campaign unfolded. Gold, a traditional hedge against geopolitical and economic uncertainty, is on track for its best year in fourteen years. Global physically-backed gold exchange-traded funds (ETFs) saw modest net inflows of 3 metric tons last week, according to the World Gold Council.
Traders will be looking to Fed officials’ comments later in the week and to US PCE inflation data due on Friday for further policy clues.
Spot silver fell 0.8% to $30.85 an ounce, platinum lost 1.2% to $963.30, while palladium shed 1.8% to $1,048.43.
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