Gold scales new high as dollar weakens ahead of Fed meeting

Synopsis

Gold prices surged to a record high on Tuesday, buoyed by a weakening dollar ahead of the Federal Reserve's anticipated policy meeting. Expectations of a near-certain interest rate cut by the Fed further fueled the rally. Meanwhile, SPDR Gold Trust reported an increase in its holdings, reflecting growing investor confidence in the precious metal. Elsewhere, a U.S.

Gold prices scaled a record peak on Tuesday, supported by a weaker dollar ahead of the Federal Reserve's policy meeting this week, where the central bank is widely expected to cut borrowing rates.

Spot gold rose 0.1% to $3,680.17 per ounce as of 0109 GMT, after hitting a record high of $3,689.27 earlier in the session. U.S. gold futures for December delivery were flat at $3,718.80.

The dollar traded near a 2-1/2-month low against the euro and close to a 10-month trough versus the risk-sensitive Aussie. A weaker greenback makes gold less expensive for other currency holders.

U.S. President Donald Trump, in a social media post on Monday, called for Fed Chair Jerome Powell to enact a "bigger" cut to benchmark interest rates.

Traders are pricing in a near-certain 25-basis-point (bps) rate cut at the end of the two-day meeting on September 17, with a small chance of a 50 bps reduction, per the CME FedWatch tool.

Lower interest rates reduces the opportunity cost of holding non-yielding bullion.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund (ETF), said its holdings rose 0.21% to 976.80 tonnes on Monday from 974.80 tonnes on Friday.

Meanwhile, on Monday, a U.S. appeals court refused to allow Donald Trump to fire Fed Governor Lisa Cook - the latest step in a legal battle threatening the Fed's longstanding independence.

Elsewhere, spot silver held steady at $42.71 per ounce, platinum eased 0.1% to $1,399.40, and palladium gained 0.4% to $1,188.59.

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