Gold hovers near record high as traders navigate Fed's giant rate cut

Gold prices steadied near record highs on Friday and were poised for a weekly gain, as markets adjusted to the U.S. Federal Reserve's recent super-sized interest rate reduction and signs that further cuts were on the horizon.

FUNDAMENTALS

* Spot gold held its ground at $2,586.98 per ounce, as of 0028 GMT, and has climbed about 0.4% for the week so far.


* Bullion rose to a record high of $2,599.92 on Wednesday following Fed's decision on rate cuts.

* U.S. gold futures edged 0.1% lower to $2,611.50.

* Data from the Labor Department on Thursday showed that the number of Americans filing new applications for unemployment benefits dropped to a four-month low last week, indicating solid job growth in September and continued economic expansion in the third quarter.

* The Fed began its easing monetary policy with a half-percentage-point rate cut on Wednesday, forecasting a further half-point reduction by year-end, a full point next year, and an additional half-point in 2026.

* U.S. President Biden expressed confidence that the central bank would continue cutting interest rates and pledged to lower costs for Americans. However, White House adviser Jared Bernstein clarified that Biden has never spoken to Fed Chair Jerome Powell about rates.

* Traders are currently pricing about a 60% chance of a 25 basis-point reduction in November and a 40% chance of a 50-bp cut, according to the CME FedWatch tool.

* Zero-yield bullion tends to be a preferred investment in a lower interest rate environment.

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.20% to 873.96 tonnes on Thursday.

* China, the world's largest gold consumer, refrained from gold imports from Switzerland in August, for the first time since January 2021, customs data from the world's biggest bullion refining and transit hub showed on Thursday.

* Spot silver was flat at $30.76 per ounce, platinum fell 0.4% to $984.90 and palladium shed 0.3% to $1,077.75.

DATA/EVENTS (GMT) 0100 China Loan Prime Rate 1Y Sept 0100 China Loan Prime Rate 5Y Sept 0600 UK Retail Sales MM Aug 0600 UK Retail Sales Ex-Fuel MM Aug 0600 UK Retail Sales YY Aug 0645 France Business Climate Mfg Sept 0645 France Business Climate Overall Sept 1400 EU Consumer Confid. Flash Sept Japan JP BOJ Rate Decision.