Gold prices rose on Tuesday following comments from officials at the Federal Reserve that bolstered expectations for larger interest rate cuts later this year. Spot gold increased by 0.1% to $2408.77 an ounce by 03:54 GMT. The yellow metal dropped to its lowest levels since July 26 in the previous session amid a global sell-off driven by recession fears in the U.S. U.S. gold futures climbed 0.2% to $2449.50.
Policymakers at the Federal Reserve dismissed the idea that weaker-than-expected job data indicates a free-falling economic recession, but they also warned that the central bank would need to lower interest rates to avoid such an outcome. Traders now expect the Federal Reserve to cut interest rates by 110 basis points this year, with over 70% anticipating a 50 basis point cut in September.
Low interest rates put pressure on the dollar and bond yields while increasing the appeal of gold, which does not yield returns. For other precious metals, silver fell 0.2% in spot trades to $27.23 an ounce. Platinum rose 1.2% to $917.30, while palladium increased by 0.9% to $857.25 after hitting its lowest point since August 2018 on Monday.
