Gold climbs 2% on Fed rate cut as investors weigh US-China trade talks

Spot gold climbed 1.3% to $3,980.00 per ounce as of 1109 GMT. U.S. gold futures for December delivery slipped 0.2% to $3,991.50 per ounce.

Gold prices jumped 2% on Thursday, helped by dollar weakness after a Federal Reserve rate cut and as investors remained uncertain regarding the outcome of a trade deal between China and the United States.

Spot gold climbed 1.3% to $3,980.00 per ounce as of 1109 GMT. U.S. gold futures for December delivery slipped 0.2% to $3,991.50 per ounce.

“Gold appears to be pushing higher as investors digest the outcome of the Trump-Xi meeting and the Fed’s decision to cut interest rates for the second time this year,” said Lukman Otunuga, senior research analyst at FXTM.

The U.S. central bank delivered a 25-basis-point rate cut on Wednesday, taking the benchmark overnight rate to a target range of 3.75%–4.00%.

“Regarding monetary policy, traders are still pricing in a 70% probability of a cut by December despite Powell attempting to cool expectations around further rate cuts,” Otunuga added.

Fed Chair Jerome Powell said officials are struggling to reach a consensus about what lies ahead for monetary policy and cautioned that markets should not assume another rate cut in December.

Non-yielding gold thrives in a low-interest-rate environment and during economic uncertainties.

Meanwhile, U.S. President Donald Trump said he had struck a deal to lower tariffs on China in exchange for Beijing resuming U.S. soybean purchases, keeping rare earths exports flowing and cracking down on illicit fentanyl trade.

China for its part agreed to delay the introduction of its latest round of rare earth export controls, but earlier restrictions on the critical minerals that have upended global trade remain.

Trump’s remarks came after face-to-face talks with Xi in Busan, South Korea, marking the finale of his whirlwind Asia trip, on which he also touted trade breakthroughs with South Korea, Japan and Southeast Asian nations.

Elsewhere, spot silver rose 1% to $48.03 per ounce, platinum gained 1% to $1,600.66 and palladium climbed 2.9% to $1,441.99.

© ZAWYA