Gold Shoots Up As Rate Cut Expectations Increase On Job Openings Data

(RTTNews) - Gold prices moved sharply higher on Wednesday, extending yesterday's surge and hitting a new record high amid increasing expectations of an interest rate cut by the Federal Reserve later this month.

Front Month Comex Gold for September delivery jumped $43.80 (or 1.23%) to $3,593.20 per troy ounce. After trading up for six consecutive sessions, this is a new record closing high for gold.

Front Month Comex Silver for September delivery shot up by 47.10 cents (or 1.15%) to $41.542 per troy ounce.

An Appeals Court in the US, last Friday ruled that President Donald Trump's tariffs on multiple trading partners are illegal. The administration is preparing to appeal the verdict to the US Supreme Court and reportedly planning to ask for an expedited hearing.

While many countries made concessions to strike a trade deal with the US, a few others - especially Canada and India - are continuing negotiations to sign an agreement and thereby avoid tariffs ranging from 10% to as high as 40%.

This new uncertainty has clouded the tariff picture once again.

On the economic front, the Mortgage Market Index released today by the Mortgage Bankers Association of America revealed a decrease to 272.50 in the week ended August 29 from 275.80 in the previous week.

The MBA Mortgage Refinance Index increased to 902.50 from 894.10 points in the previous week, while the MBA Purchase Index decreased to 158.70 from 163.80 points.

Data released by the US Labor Department today revealed that job openings in the US fell by 176,000 to 7.18 million in the month of July, but the number of job-quits was little changed at 3.208 million.

On the monetary front, traders are betting highly on a rate cut by the Fed at their September 16-17 meeting. Lower rates would fuel brisk economic activity in the US and could further weaken the US dollar which could be a strong tailwind for gold.

Trump had been criticizing US Fed Chair Jerome Powell for keeping rates higher. Adding to the escalation, last month, Trump announced the removal of Fed governor Lisa Cook over allegations of mortgage fraud. His aggressive moves are seen as gradual attempts to assert influence over the Fed.

According to CME Group's FedWatch tool, investors are pricing in a 95.6% chance of a 25 basis-point Fed rate cut at the FOMC policy meeting on September 17.

On the geopolitical front, as Trump's diplomatic efforts to bring peace between warring Russia and Ukraine fell flat due to Russia's non-cooperation, eastern Ukraine suffered more sweeping overnight attacks by Russia. The ongoing geopolitical risk supported gold on the upside.

Gold prices also hit a record high yesterday and have gained more than 34% this year, while the US dollar has declined 9% so far this year.