Gold extends gains on easing rate hike fears, markets await US Fed minutes

Gold continued its upward trend on Tuesday (Aug 18) as concerns about a September US interest rate hike diminished, with traders eagerly anticipating minutes from the Federal Reserve's latest meeting for additional insights into the central bank's monetary policy trajectory. Spot gold edged up 0.2 percent to US$4,424.28 per ounce, while US gold futures for December delivery climbed 0.2 percent to US$4,480.90.

The US dollar remained near multi-month lows against other major currencies, which makes dollar-priced metals more affordable for holders of alternative currencies. Analyst Tony Sycamore of IG noted that gold is benefiting from the "soft US economic data, which has raised hopes that the Fed will keep rates on hold this year." Bullion typically thrives in a low interest rate environment, as it diminishes the opportunity cost of owning non-yielding assets.

The Federal Reserve is expected to keep its key interest rate steady through September and the end of 2026, according to a majority of economists in a Reuters poll. Market attention will now shift to the minutes of the Fed's most recent policy meeting, which are scheduled for release on Wednesday. Sycamore also highlighted that gold is regaining its safe-haven status due to hawkish remarks from Iran, which has shifted to a "fully offensive" military stance because talks to permanently end the conflict with the US have stalled.

Meanwhile, spot silver increased 0.9 percent to US$66.40 per ounce, platinum rose 0.2 percent to US$1,772.75, and palladium fell 0.3 percent to US$1,330.05.