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Gold prices touch their highest levels in more than a month
Gold prices are on track to end the month higher, after hitting their highest levels in more than a month on Thursday, benefiting from a weaker dollar and growing expectations that the US Federal Reserve will cut interest rates in September.
Spot gold rose 0.7% to around $3.442 per ounce.
Bullion prices rose more than 4.5% in August after new inflation data reinforced expectations of a September interest rate cut.
Non-yielding gold typically performs well in a low interest rate environment.
Conversely, the dollar is heading for a monthly decline, making the dollar-denominated precious metal more attractive to holders of other currencies.
"Gold is benefiting from this uncertainty (about the independence of the Federal Reserve), as evidenced by inflows into gold exchange-traded funds (ETFs) of just under 15 tonnes in the past two days," Commerzbank said in a note sent to Reuters. "However, the prospects for gold to rise above $3,400 appear increasingly limited."
Wall Street is also turning bullish on safe-haven assets. Bank of America raised its six-year average gold price forecast by 6% to $3,049 per ounce on Friday, citing factors including the US structural deficit and President Donald Trump's threats to the independence of the Federal Reserve.
"Gold remains a prominent investment haven ahead of what is expected to be a easing cycle in the US starting next month," said Tim Waterer, senior market analyst at KCM Trade.
Federal Reserve Governor Christopher Waller reiterated his call for lower short-term borrowing costs on Thursday, affirming his support for a September interest rate cut, while leaving the door open for further cuts over the next three to six months.
According to the FedWatch tool, traders see an 86% chance of the Fed cutting interest rates by 25 basis points at its next meeting.
Gold, as a non-yielding asset, is more attractive in a low interest rate environment.
