Gold fell slightly on Wednesday, but remains near a new record level reached yesterday amid optimism about the easing of the Fed's monetary policy, Western fund inflows and the fall of the US currency.
The US dollar index is trading near its lowest level since January 2, while the yield on 10-year US Treasury bonds has fallen to its lowest level since August 5, making non-yielding bullion more attractive for investors.
Since the beginning of the year, the price of gold has jumped by about 22%, as geopolitical tensions, uncertainty around the US presidential election and expectations of a Fed rate cut have increased demand for the precious metal.
According to the CME FedWatch Tool, markets see a 31.5% probability of a 0.5% rate cut in September (down from 36% the week before), and a 68.5% probability of a 0.25% rate cut (up from 64% the week before). However, these expectations may change dramatically after the publication of the minutes of the July Fed meeting (today at 18:00 GMT) and Fed Chair Jerome Powell's speech on the U.S. economic outlook (on Friday at 14:00 GMT).
Meanwhile, data showed that yesterday the assets of SPDR Gold Trust - the world's largest gold-backed exchange-traded fund - fell by 0.20% after hitting seven-month highs on Monday.