Gold Prices Dip After Record High as Investors Take Profits

Gold eased on Thursday after surging past the $4,000 per ounce mark on Wednesday, as investors booked gains amid ongoing geopolitical worries and rising odds of U.S. interest rate cuts. Spot gold fell 0.4% to $4,021.99 per ounce as of 0117 GMT, after hitting a record high of $4,059.05 the previous day. U.S. gold futures for December delivery declined 0.7% to $4,042.60. (CNBC)

Minutes from the Federal Reserve’s September 16–17 meeting, released on Wednesday, showed officials agreed that risks to the U.S. labour market had increased enough to justify a rate cut, though they remained cautious because inflation is still sticky. Markets are pricing in two further 25-basis-point cuts in October and December, with probabilities of about 95% and 83% respectively on the CME FedWatch tool. (CME Group)

Will further rate cuts keep the gold rally going, or will other developments send traders back to risk assets?

Market Backdrop and Safe-haven Flows

A weaker dollar and heightened global uncertainty have helped drive bullion to fresh highs this year. Gold is a non-yielding asset that tends to gain when interest rates fall, and investors have flocked to the metal as a hedge against market turbulence. Political unrest in Japan and France, and an ongoing U.S. government shutdown, have added to a sense of caution that is supporting demand for safe-haven assets.

The metal has risen about 54% year to date, powered by strong central bank buying, steady inflows into gold-backed exchange-traded funds, and a pickup in retail interest. The SPDR Gold Trust, the world’s largest gold ETF, reported holdings of 1,014.58 tonnes on Wednesday, up from 1,013.15 tonnes a day earlier. (The Business Times)

Broader Markets Move in Step

Macro moves outside the bullion market helped shape the session. The U.S. dollar index was near a one-week low, making gold relatively cheaper for holders of other currencies. Benchmark 10-year Treasury yields eased as traders bet on a softer Fed policy path. U.S. equities were mixed, with investors weighing the promise of rate relief against concerns over growth. Oil prices fell slightly after the Israel-Hamas peace plan.

Central Bank Purchases Underpin Prices

Central bank appetite for gold has been a persistent support to prices. Data from the World Gold Council showed that central banks added a net 15 tonnes in August, led by the National Bank of Kazakhstan having added 8 tonnes to its stockpile. Many emerging market economies are adding gold to diversify reserves and guard against currency shocks, a trend that has kept a steady floor under prices even during short-term pullbacks. (World Gold Council)

Near-term Outlook and Risks

Market participants remain divided on the durability of the rally. Some expect bullion to test higher levels if rate cuts materialise as priced, while others point out that any sustained improvement in U.S. inflation or employment could reduce the need for aggressive easing and cap gains in gold. Traders are watching upcoming U.S. economic releases closely, including the jobs report, which could influence the Fed’s timetable and short-term price action.

Other Precious Metals

Silver, which has both precious and industrial demand, also saw a small move. Spot silver gained 0.1% to $48.91 per ounce after reaching an all-time high of $49.57 on Wednesday. Platinum fell 0.7% to $1,650.60 and palladium dropped 1% to $1,435.25. The broader metals complex showed mixed performance as investors balanced safe-haven buying with profit taking. (Economic Times)

For now, the bullion market remains in the spotlight as central banks, ETFs and retail buyers continue to shape demand. With rate cut expectations high and geopolitical risks still in play, the question for investors is whether this is a pause on the way up or the start of a longer consolidation?

Sources

CNBC
The Business Times
World Gold Council
Economic Times