Gold’s record rally stalled as investors took profits

Gold prices fell slightly on Tuesday, with investors taking profits after gold hit a new record high in the previous session, hoping for additional interest rate cuts from the Federal Reserve, and increased safe-haven demand.

The spot gold price fell by 0.3 percent to reach $4,340.99 per ounce, starting at 04:56 GMT, after reaching its highest level ever at $4,381.21 on Monday. US gold futures contracts for December delivery settled at $4,357.80 per ounce.

Tim Waterer, chief market analyst at KCM Trade, said: “Profit taking and a decline in safe haven flows contributed to reducing the strength of the gold price today… Any decline in the price of gold will be viewed as buying opportunities as long as the (Federal Reserve) remains on its current path of lowering interest rates.”

Markets are fully pricing in a quarter-point cut in interest rates by the Federal Reserve this month and another cut in December, according to the CME Group’s Fed Watch tool. Gold, a non-yielding asset, tends to perform well in a low interest rate environment.

Waterer added: “Gold’s current rally still has room to continue to rise provided that US CPI data later this week does not produce any negative upward surprises.”

The data, scheduled to be released on Friday after a delay due to the government shutdown, is expected to show the index rising 3.1 percent year-on-year in September, according to economists polled by Reuters.

The US government shutdown extended into its twentieth day on Monday, after senators failed for the tenth time last week to break the deadlock. White House economic adviser Kevin Hassett said on Monday that the shutdown would likely end this week.

The shutdown has delayed the release of key economic data, leaving investors and policymakers in a bit of a vacuum ahead of the Federal Reserve’s monetary policy meeting next week.

On the trade front, US Treasury Secretary Scott Besent is expected to meet with Chinese Deputy Prime Minister He Lifeng in Malaysia this week, in an attempt to prevent the escalation of US customs duties on Chinese goods.

Elsewhere, spot silver fell 1.2 percent to $51.83 an ounce, platinum fell 0.7 percent to $1,627.53, and palladium rose 0.1 percent to $1,497.62.