Gold Eases as RBA Cuts Rates

• Gold prices fell marginally week on week, easing by -1.3% in USD terms to $3338.1oz at the time of writing.

• The decline in Australian dollar terms was milder, falling by -1.0%, with local investors cushioned by a -0.3% decrease in the Australian dollar to USD $0.6497.

• Silver performance was muted week on week, remaining unchanged in AUD terms and falling by -0.4% in USD terms, still holding on to the USD $38oz price level

• Risk assets delivered strong performance, the S&P 500 and tech-heavy NASDAQ rose 2.0% and 1.2% respectively, with the ASX 200 also showing strong performance, gaining 0.5% week-on-week driven by fresh inflation data and interest rate cuts.

• US markets look like they will close the week near record highs, despite higher than estimated inflation data with CPI rising 2.7% annualised while core CPI was slightly higher than expected (3.1%). PPI was particularly hot, surging at the fastest rate in three years.

• Despite the inflation data, 96% of traders are pricing in a 25-basis point rate cut by the US Federal Reserve in September, potentially bringing the rate down to 4.0%-4.25%.

• Should the Fed deliver on this cut, history would suggest it will provide a tailwind for precious metal prices, with gold rallying substantially during rate cutting cycles this century as a defensive asset in comparison to cash and term deposits due to its non-yielding characteristics (Figure 1).

• Bitcoin saw a substantial gain in a week, hitting $124,480, its highest level since mid-July. It has however retreated overnight to $118,262. The recent price surge has been fuelled by the Trump administration’s relaxed regulatory approach and growing institutional adoption when it comes to cryptocurrencies and cryptocurrency ETFs.

Figure 1: Gold in USD & US Fed Funds Effective Rate (Dec 1969–June 2025)

Sources: LBMA, U.S. Department of the Treasury

The RBA’s August Interest Rate Decision & Impacts on Precious Metal Prices

The RBA cut interest rates by 25 basis points during their August meeting, delivering its third interest rate cut this calendar year , taking the cash rate to 3.6% (Figure 2). The RBA are likely comfortable enough with local inflation pressures, with CPI and trimmed mean inflation sitting comfortably within the RBA’s target band of 2-3%, at 2.1% and 2.7% respectively in the 12 months to the June 2025 quarter.

Figure 2: RBA Cash Rate (Feb 2022-Aug 2025)

Source: RBA

Given the backdrop of falling rates, ongoing geopolitical risks and tariff uncertainty, the current environment remains highly supportive of gold as an investment.

An asset that typically thrives in periods of low and falling real interest rates, gold is likely to benefit as investors shift from lower-yielding cash and term deposits toward assets with higher capital growth potential, which includes precious metals.

The risk of elevated volatility in share markets, the potential for a tariff induced economic slowdown, and still problematic inflation levels in the United States only add to the case for including precious metals in a well-diversified portfolio.

See You at the Precious Metal Forum Next Week

The ABC Bullion Precious Metal Forum, Gold and the New World Order, is on next Tuesday 19^th August at the Ivy Ballroom in Sydney. The forum will be headlined by a keynote presentation from New York Times best-selling author and globally renowned precious metals expert Jim Rickards.

Jordan Eliseo
General Manager, ABC Bullion

Luke Tyler
Market and Business Analyst, ABC Bullion

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