EBC Markets Briefing | Gold steadied above 2,400 on hedging demand

Gold prices dipped on Friday after rising more than 1% the previous day, supported by firm safe-haven demand and growing expectations for a sizeable interest rate cut from the Fed in September.

On the geopolitical front, the killing of senior members of militant groups Hamas and Hezbollah last week raised the possibility of retaliatory strikes by Iran on Israel. A ceasefire in Gaza appears remote at present.

One US official and one western intelligence official told CNN that fears are higher now about Hezbollah taking action than Iran, raising the prospect that the Lebanon-based militia group may act without them.

China’s central bank didn’t buy any gold for a third straight month in July, as the precious metal surged to record high. Meanwhile, gold ETFS saw inflows three months in a row in July.

The IMF warned in July that inflation in many major economies has been cooling slower than expected, flagging a potential risk to global growth from interest rates staying higher “for even longer.”

While the organisation sees the global economy still poised for a soft landing, the higher-for-longer scenario means bullion could outstrip Treasuries as a tool to hedge shaky equity markets.

The yellow metal remained bullish staying above the 50 SMA, but it will need to breach the high at $2,432 hit in 24 July for an attempt to set a new record.

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