Gold Prices Extend Gains as Rate-Hike Fears Ease Ahead of Fed Minutes

Gold prices continued to climb for a third straight session on Tuesday as expectations surrounding a potential US interest rate hike next month began to soften. Market participants are currently awaiting the release of the minutes from the Federal Reserve's most recent policy meeting, scheduled for Wednesday, to gather clearer indications regarding the future path of monetary policy.

During early trading, spot gold registered a 0.2 per cent increase, reaching $4,424.28 per ounce by 0130 GMT. Meanwhile, US gold futures for December delivery also advanced by 0.2 per cent, settling at $4,480.90.

Supporting the upward trend in bullion, the US dollar hovered near multi-month lows against several major currencies. A weaker dollar generally reduces the cost of dollar-priced metals for buyers using alternative currencies.

According to IG market analyst Tony Sycamore, gold is extending its recent gains following soft US economic data from the previous week, which bolstered expectations that the central bank will maintain steady interest rates through the remainder of the year. Bullion traditionally performs well in low-interest-rate environments because such conditions reduce the opportunity cost associated with holding non-yielding assets.

Data from a Reuters poll indicates that most economists expect the US central bank to keep its key interest rate unchanged both next month and through the end of the year. Market pricing shifted significantly following unexpected job losses in July, lower-than-expected consumer price inflation, and weaker retail sales data, with the probability of a September quarter-point rate hike dropping to a near-65 per cent chance of a hold.

In addition to interest rate expectations, gold is regaining support from its traditional safe-haven status. Sycamore noted that hawkish rhetoric from Iran helped the metal absorb the impact of higher yields. A senior Iranian official informed Reuters that the country would shift to a fully offensive military posture after negotiations for a permanent end to the conflict with the US stalled, and Washington ruled out extending a temporary ceasefire agreement.

Movements across other precious metals varied during the session. Spot silver advanced 0.9 per cent to reach $66.40 per ounce, while platinum recorded a marginal 0.2 per cent increase to $1,772.75. Conversely, palladium dipped by 0.3 per cent, trading at $1,330.05.

"The recent movement in gold prices highlights how sensitive global commodity markets are to macroeconomic indicators and central bank policy shifts. For businesses and investors navigating uncertain economic cycles, fluctuations in currency values and interest rate expectations directly impact asset allocation and risk management strategies. Monitoring central bank communications remains critical for understanding broader market liquidity and economic direction." — Dr. Shishir Gupta, Founder & CEO, StartupLanes