Spot Gold Recaptures $1,500 After 2-Day Lag as Longs Bet Again on Dovish Fed

By Barani Krishnan

Investing.com - Gold bullion reclaimed its stake in $1,500 territory on Tuesday after a two-day abeyance from that level as gold longs bet again on the yellow metal’s fortunes ahead of the Federal Reserve meeting next month.

Spot gold, reflective of trades in bullion, was up $10.37, or 0.7%, at $1,506.34 per ounce by 3:00 PM ET (19:00 GMT). Bullion had fallen beneath $1,500 over the past two sessions as some investors bet the Fed would be unlikely to add to its dovish tone ahead of its Jackson Hole, Wyo. retreat.

Gold futures for December delivery, traded on the Comex division of the New York Mercantile Exchange, settled up $4.10, or 0.3%, at $1,515.70.

Comex gold soared to six-year highs on prospects for easier monetary policy from the Fed and other central banks looking to buoy an economy weighed down by the prolonged U.S.-China trade dispute.

Mark Mobius, veteran investor and founder of Mobius Capital Partners, told Bloomberg TV that investors "should be buying (gold) at any level, frankly," given the global outlook for falling interest rates.

He also said that interest in cryptocurrencies will simultaneously boost demand for “real, hard assets, and that includes gold.”

But traditional buyers seem less convinced. Demand for the precious metal in India, the world’s second-largest buyer, is fading amid record high domestic prices, according to a Bloomberg report.

Higher prices appeared to have dented demand, which grew 9% in the first half of the year. Full-year demand for gold in India is now expected to be at par with 2016, when consumption hit a seven-year low of 666 tons as buyers restricted themselves to wedding-related purchases.

With both the Fed and European Central Bank also releasing minutes from their latest policy meetings this week, a boon for gold would be hints of a rate cut that would add to the Fed’s 25-basis-point reduction in July or the ECB’s first easing in a long time.

Markets are also awaiting Fed Chairman Jay Powell’s speech at Jackson Hole Friday.

Strategists at Saxo Bank said Powell’s speech provides an unknown risk of either a deeper consolidation in gold or further support.

“We do expect some fireworks on Friday,” Ole Hansen, head of commodity strategy at Saxo Bank, said in the bank’s morning call.

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