Gold touches $2,500 an ounce – London Business News | Londonlovesbusiness.com

Gold touched $2,500 an ounce for the first time in history in spot trading, while COMEX futures reached $2,538.

Gold’s gains on Friday come as more weakness in the US economy comes as building permits hit a more than year-low and housing starts fell to a four-year low.

While weaker-than-expected housing market numbers, along with a slew of data this week, may boost hopes for more rate cuts this year, especially in September, they have not revived the case for a 50-bps cut at the next meeting.

In other words, an emergency rate cut to save the economy is unlikely after markets seem to have overpriced it. Despite that, gold continued its historic gains.

The probability of a 25-basis point cut in September is 76.5% compared to 23.5% for a 50-basis point cut, according to the CME FedWatch Tool.

In contrast to the prevailing negativity about the health of the US economy, we saw a higher-than-expected increase in consumer confidence today, according to the University of Michigan’s survey for August. This sentiment was driven by optimism about personal financial and economic outlook, according to the survey.

This may help calm fears about the US economy falling into recession, as improved sentiment could lead to support for spending.

Gold may be able to hold its gains without significant progress in the ceasefire negotiations in Gaza, as they could ultimately lead to defusing a wider regional war. However, while yesterday’s negotiations in Qatar did not result in a breakthrough, “some gaps have been narrowed,” according to US National Security Council spokesman John Kirby.

Meanwhile, Israeli Prime Minister Benjamin Netanyahu stuck to his demand that his forces remain in the Philadelphi corridor, according to The Washington Post. The focus remains on the outcomes of Friday’s negotiations.