Gold climbs over 1% on demand, hopes for Fed rate cuts; silver up 1.8%

Gold prices climbed over 1% on Thursday, driven by strong safe-haven demand and increasing anticipation of a significant interest rate cut by the U.S. Federal Reserve in September.

Spot gold rose 1.3% to $2,413.19 per ounce by 1338 GMT, poised to break a five-session losing streak. U.S. gold futures also gained 0.8%, reaching $2,452.20.

“Gold prices remained slightly positive near ₹69,000, with short-term support around ₹68,500, aided by Comex gold holding steady at $2,380. Weekly jobless claims data, which came in lower at 241k versus 249k, might exert slight pressure on gold prices. Although a September rate cut by the Fed appears likely, upcoming U.S. CPI data for July and the Nonfarm Payrolls report in early September will be crucial in confirming the certainty of the rate cuts. Gold traders should closely monitor these developments to gauge the future direction of prices,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

What's weighing on gold prices?

On the geopolitical front, the recent killing of senior members of the militant groups Hamas and Hezbollah last week has heightened the likelihood of retaliatory strikes by Iran against Israel.

Bullion is often viewed as a safeguard against geopolitical and economic uncertainties and typically performs well in a low-interest-rate environment.

Brokerages such as J.P. Morgan, Citigroup, and Wells Fargo have predicted a 50-basis-point interest rate cut by the Fed in September following last week's U.S. jobs data.

According to the CME FedWatch Tool, the market now estimates a 72% probability of a 50-basis-point cut in September, up from 70% on Monday, with an additional cut expected in December.

U.S. data revealed that initial jobless claims last week were 233,000, lower than the 240,000 economists had predicted and a decrease from the previous week's 250,000. This helped alleviate concerns about a potential slowdown in the world's largest economy.

Meanwhile, spot silver increased by 1.8% to $27.09 per ounce, platinum rose 0.8% to $926.90, and palladium climbed 2.6% to $906.