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Gold Hits All-time High as Fed Rate-cut Hopes Bolster Appeal

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
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Gold Hits All-time High as Fed Rate-cut Hopes Bolster Appeal

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo

Gold prices rose more than 1% to hit a record high on Thursday, helped by expectations of an interest rate cut by the Federal Reserve next week after US data signaled a slowing of the economy.
Spot gold was up 1.6% at $2,552.63 per ounce, as of 11:40 a.m. ET (1540 GMT). US gold futures were up 1.5% at $2,581.40, Reuters reported.
The US Labor Department said initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 230,000.
US producer prices increased slightly more than expected in August amid higher costs for services, but the trend remained consistent with subsiding inflation.
"We are headed towards a lower interest rate environment so gold is becoming a lot more attractive... I think we could potentially have a lot more frequent cuts as opposed to a bigger magnitude," said Alex Ebkarian, chief operating officer at Allegiance Gold.
Markets are currently pricing in an 85% chance of a 25-basis-point US rate cut at the Fed's Sept. 17-18 meeting, and a 15% chance of a 50-bps cut, the CME FedWatch tool showed.
Zero-yield bullion tends to be a preferred investment amid lower interest rates.
"The labor market is continuing to falter and if the labor market deteriorates, the journey that they'll embark on in cutting rates is going to go for an extended period of time," said Phillip Streible, chief market strategist at Blue Line Futures.
Elsewhere, palladium gained 2.3% to $1,031.00 per ounce, hitting its highest in over two months.
Traders said the metal was benefiting from a short-covering rally after Russian President Vladimir Putin said on Wednesday that Moscow should consider limiting exports of uranium, titanium and nickel in retaliation against the West.
"Putin did not mention palladium. But since the metal is a by-product of Russian nickel production, such export curbs could drive down production of both metals and deepen the current deficit in the palladium market," said WisdomTree commodity strategist Nitesh Shah.

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Oil Extends Climb on Supply Fears, Trade War Concerns Cap Gains

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
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Oil Extends Climb on Supply Fears, Trade War Concerns Cap Gains

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil prices inched higher on Tuesday after threats by US President Donald Trump to impose secondary tariffs on Russian crude and attack Iran, though worries about the impact of a trade war on global growth capped gains.

Brent futures rose 21 cents, or 0.3%, to $74.98 a barrel at 0645 GMT, while US West Texas Intermediate crude futures climbed 22 cents, or 0.3%, to $71.70.

The contracts settled at five-week highs a day earlier.

"Near-term risks are skewed to the upside, with US threats of secondary tariffs on Russian and Iranian oil leading market participants to price for the risks of tighter oil supplies," said Yeap Jun Rong, market strategist at IG, Reuters reported.

However, broader themes still revolve around concerns of upcoming tariffs weighing on global demand, along with prospects of increased supply from OPEC+ and the US, said Yeap.

A Reuters poll of 49 economists and analysts in March projected that oil prices would remain under pressure this year from US tariffs and economic slowdowns in India and China, while OPEC+ increases supply.

Slower global growth would dent fuel demand, which might offset any reduction in supply due to Trump's threats.

After news of Trump's threats initially boosted prices on Monday, traders told Reuters they viewed the president's warnings to Russia, at least, as a bluff.

Trump, on Sunday, told NBC News that he was very angry with Russian President Vladimir Putin and would impose secondary tariffs of 25% to 50% on Russian oil buyers if Moscow tries to block efforts to end the war in Ukraine.

Tariffs on buyers of oil from Russia, the world's second largest oil exporter, would disrupt global supply and hurt Moscow's biggest customers, China and India.

Trump also threatened Iran with similar tariffs and bombings if Tehran did not reach an agreement with the White House over its nuclear program.

"For now, it appears to be just a threat to Russia and Iran. However, if it becomes a reality, it creates plenty of upside risk to the market given the significant oil export volumes from both countries," said ING commodities strategists on Tuesday.

The market will be watching for weekly inventory data from US industry group the American Petroleum Institute later on Tuesday, ahead of official statistics from the Energy Information Administration on Wednesday.

Five analysts surveyed by Reuters estimated on average that US crude inventories fell by about 2.1 million barrels in the week to March 28.