Gold prices experienced an uptick, reaching a two-week peak on Tuesday, coinciding with a decline in the dollar following U.S. President Donald Trump’s announcement regarding the removal of Federal Reserve Governor Lisa Cook from her role on the Fed’s board of directors. Spot gold experienced an increase of 0.5%, reaching $3,384.34 per ounce as of 0055 GMT, marking its highest level since August 11. U.S. gold futures for December delivery experienced an increase of 0.4%, reaching a price of $3,432.40.
The U.S. dollar index experienced a decline of 0.3% relative to its counterparts, thereby diminishing the appeal of gold for international purchasers. Trump on Monday executed the notable decision to terminate Lisa Cook, the inaugural African-American woman to hold the position of Federal Reserve governor, citing allegations of impropriety in mortgage borrowing. Fed Chair Jerome Powell on Friday indicated a potential interest rate reduction at the upcoming meeting of the U.S. central bank, highlighting the increasing risks to the job market while also acknowledging that inflation continues to pose a significant threat. He emphasized that no decision has been finalized.
Markets are currently reflecting an 83% probability of a quarter-point rate cut during the Federal Reserve’s policy meeting on September 17, as indicated by the CME FedWatch Tool. Gold typically experiences appreciation when interest rates are low, as this diminishes the opportunity cost associated with holding non-yielding bullion. Attention is now directed towards the Personal Consumption Expenditures Price Index, which is the Federal Reserve’s favored measure of inflation, set to be released on Friday for additional insights regarding the trajectory of U.S. interest rate cuts.
SPDR Gold Trust, recognized as the largest gold-backed exchange-traded fund globally, reported an increase in its holdings by 0.18%, rising to 958.49 tonnes on Monday from 956.77 tonnes on Friday. Elsewhere, spot silver experienced an increase of 0.4%, reaching $38.72 per ounce, while platinum saw a rise of 0.7% to $1,352, and palladium advanced by 1% to $1,096.75