Gold prices consolidate near all-time highs, supported by optimism over U.S. rate cuts

Gold prices steadied on Monday, trading close to a record hit in the previous session, as expectations of a U.S. interest rate cut next month boosted the precious metal’s appeal.

Spot gold was trading down 0.2% at $2,501.19 an ounce by 0042 GMT. Prices had risen to an all-time high of $2,509.65 an ounce on Friday.

U.S. gold futures rose 0.1% to $2,540 an ounce.

Data on Friday showed U.S. single-family homebuilding fell in July as rising mortgage rates and higher home prices kept potential buyers on the sidelines, suggesting inflation is trending lower.

Last week, strong retail sales and lower-than-expected initial jobless claims, along with tame inflation data, restored confidence in the world’s largest economy.

Traders are confident the Federal Reserve (U.S. central bank) will cut interest rates on Sept. 18, with the focus now on the size of the cut. They estimate a 75.5% chance of a 25 basis point cut and a 24.5% chance of a 50 basis point cut, according to CME’s FedWatch market monitor.

A low-interest rate environment could boost the appeal of non-yielding bullion.

Markets will now await the minutes of the Federal Reserve’s July Monetary Policy Committee meeting on Wednesday and a speech by Fed Chairman Jerome Powell on the outlook for the U.S. economy on Friday for more indicators.

In other precious metals, silver spot trading price fell 0.22% to $28.94 per ounce. Platinum fell 0.1% to $953.06 per ounce. Palladium fell 0.8% to $943.46 per ounce.