By Daksh Grover
(Reuters) – Gold prices held steady on Tuesday after hitting a record high in the previous session, while focus shifted to the U.S. interest rate verdict, with many investors leaning towards a bigger-than-expected rate reduction.
Spot gold held its ground at $2,577.98 per ounce, as of 0542 GMT. Bullion rose to a record high of $2,589.59 on Monday.
U.S. gold futures were also steady at $2,605.80.
“The rally in gold prices has taken a breather in today’s session,” said IG market strategist Yeap Jun Rong, adding that after recent gains driven by expectations of a more aggressive rate cut, there’s now some caution as investors await further clarity from policymakers.
All attention is on the U.S. Federal Reserve’s two-day policy meeting, which concludes on Wednesday. Markets are currently pricing in an 67% probability of a 50-basis-point easing, compared with 43% on Friday.
Zero-yield bullion tends to be a preferred investment amid lower interest rates.
Gold prices might see a correction, even a 50 bp cut this week might lead to initial weakness as expectations are met and recent long positions are reduced, said Nicholas Frappell, global head of institutional markets at ABC Refinery.
The dollar was down 0.1%, making greenback-priced gold less expensive for other currency holders. [USD/]
U.S. retail sales data for August, due at 1230 GMT, is also on investors’ radar.
Goldman Sachs reiterated its optimistic outlook on gold prices. “We find that ETF (exchange-traded fund) holdings backed by physical gold continue to rise gradually as the Fed policy rate comes down,” it said in a note on Monday. [GOL/ETF]
Spot silver was nearly flat at $30.76 per ounce, while platinum rose 0.6% to $988.65.
Palladium gained 0.8% to $1,085.64, after hitting its highest level since April 11 earlier in the session.
Chinese markets are closed for the day due to the mid-autumn festival break.
(Reporting by Daksh Grover in Bengaluru; Editing by Sherry Jacob-Phillips and Rashmi Aich)
