Gold prices continued their upward trend on Friday, marking a fourth consecutive weekly gain as fears of a weakening U.S. labor market overshadowed inflation concerns ahead of an anticipated Federal Reserve rate cut next week. Spot gold rose by 0.5% to $3,651.92 per ounce, approaching the record high of $3,673.95 reached earlier in the week. The precious metal has seen a 1.8% increase in value this week alone.
U.S. gold futures for December delivery also saw a 0.5% rise to $3,690.30. Analysts like Kelvin Wong from OANDA note that the market is now anticipating the possibility of three interest rate cuts by the end of 2025, significantly more than previous estimates. This expectation is currently bolstering the price of gold.
Recent economic data has added fuel to the fire, with U.S. consumer prices experiencing a 0.4% increase in August, the largest monthly rise in seven months. Additionally, a surprise decline in U.S. producer prices in the same month has raised concerns. Weekly jobless claims have surged, underscoring a significant softening in labor market conditions, following a disappointing U.S. employment report that suggested job growth nearly stalled in August.
The Federal Reserve is widely expected to announce a 25 basis point interest rate cut next week, with a slight possibility of a larger 50-basis-point reduction, according to the CME Fedwatch tool. Gold, a non-yielding asset typically considered a safe-haven investment during times of economic uncertainty, tends to perform well in a low-interest rate environment.
Ryan McIntyre, managing partner at Sprott Inc., believes that gold may soon breach the $3,700 mark and faces resistance at around $3,900 in the short term. With gold having already surged by 39% this year due to multiple factors including a weak dollar, central bank buying, and global instability, many institutions still view the metal as under-owned.
In tandem with the rise in gold prices, other precious metals also saw gains, with spot silver up 1.2% to $42.07 per ounce, platinum rising by 1.1% to $1,393.71, and palladium increasing by 1% to $1,200.31. All three metals are on course for a weekly increase, reflecting ongoing investor interest in the precious metals market.
