Gold continued yesterday's rally and again updated its record high, helped by weakness of the US currency and the increased likelihood of a significant Fed rate cut at its September meeting.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.18% to 101.19 (the lowest value since September 6), making greenback-priced gold less expensive for others currency holders.
Experts said that the Fed is preparing to begin a potential long and frequent cycle of monetary policy easing, which is a positive factor for gold, which is non-yielding. According to the CME FedWatch Tool, markets see a 43% probability of a 0.5% rate cut in September (up from 30% the week before), and a 57% probability of a 0.25% rate cut (down from 70% the week before), with a 1.16% rate cut expected by the end of the year.
Meanwhile, the International Monetary Fund also supported the start of the Fed's interest rate cut cycle at the September meeting, pointing to an improvement in the inflationary situation.
Today, market participants will focus on U.S. import price data for August, as well as the Reuters/Michigan consumer sentiment index for September, especially the details of the report related to consumer inflation expectations. This data may provide additional clues about the prospects for interest rates. Economists expect the consumer sentiment index to rise to 68.0 from 67.9 in August, while annual inflation expectations remained at 2.8%.