Gold prices rose in European trading on Monday, heading for a second consecutive gain and nearing record highs as US 10-year Treasury yields weakened.
The less optimistic tone of Federal Reserve Chair Jerome Powell's speech at Jackson Hole last week increased the likelihood of multiple rate cuts by the Fed this year.
Gold Prices:
Gold prices increased by 0.5% today, reaching $2,525 per ounce, after hitting a session low of $2,508.
On Friday, gold prices had risen 1.15%, resuming gains and approaching a record high of $2,531.
The precious metal also gained 0.25% last week, marking its second consecutive weekly increase, as both the dollar and US yields declined.
US Yields:
US 10-year Treasury yields dropped 0.7%, set for a second straight loss and nearing multi-week lows, which boosted non-yielding assets like gold.
The latest decline followed Powell's Jackson Hole speech last Friday, where he confirmed the imminent start of a new cycle of monetary easing.
Powell's Remarks:
At Jackson Hole, Fed Chair Jerome Powell signaled upcoming rate cuts but did not specify a date.
He stated that it is time to adjust policies, with a clear direction in mind, but emphasized that the timing of the next rate cut will depend on economic data and the evolving outlook.
Powell highlighted significant progress in curbing inflation and noted that the Fed can now focus on maintaining an economy with full employment.
US Rate Expectations:
Following Powell's speech, the probability of a 0.5% Fed rate cut in September increased from 25% to 38%, while the probability of a 0.25% cut fell to 62%.
Markets are now expecting a total of 100 basis points in rate cuts by the Fed this year.
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