Gold prices rose in the European market on Friday to resume gains that had paused yesterday, trading once again near record highs, on track to post a fourth consecutive weekly gain, supported by the current weakness in US dollar levels.
Mounting concerns over weakness in the US labor market have overshadowed inflation worries ahead of a widely expected interest rate cut by the Federal Reserve next week.
Price Overview
• Gold prices today: Gold rose by 0.65% to ($3,656.71), from the opening level at ($3,633.96), with a low at ($3,630.63).
• At Thursday’s settlement, gold lost 0.2% in its second decline in the last three sessions, following profit-taking from the all-time high of $3,674.80 an ounce.
Weekly Performance
Over the course of this week, which officially ends at today’s settlement, gold is up about 1.95% so far, on track for a fourth straight weekly gain.
These weekly gains are attributed to strong safe-haven demand amid rising concerns about soaring global debt levels and intensifying geopolitical tensions in the Middle East and Eastern Europe.
US Interest Rates
• US consumer prices rose by 0.4% in August, the largest monthly increase in seven months, while data on Wednesday showed an unexpected contraction in US producer prices for the same month.
• Weekly jobless claims increased last week, confirming a tangible decline in the labor market. This followed last Friday’s US employment report, which indicated that job growth nearly stalled in August alongside a rise in unemployment.
• According to CME Group’s FedWatch tool: the probability of a 25-basis-point rate cut at the September meeting is currently priced at 100%, with a 7.5% chance of a larger 50-basis-point cut.
• The probability of a 25-basis-point cut in October is also priced at 100%, with a 6% chance of a 50-basis-point move.
• The Federal Reserve meets next week to discuss appropriate monetary policy for US economic developments, with a widely expected 25-basis-point rate cut.
Gold Outlook
• Kelvin Wong, market analyst for Asia-Pacific at OANDA, said: the market is now pricing in a high probability of at least three Fed rate cuts before the end of 2025, far above the expectations from two months ago, which supports higher gold prices.
• Ryan McIntyre, managing partner at Sprott, said: the price is not far from $3,700, which could happen at any moment. In the short term, we see resistance around $3,900 based on our technical analysis, but in the long term, we believe this is still far below the level of institutional ownership at most investment firms.
SPDR Fund
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 2.01 metric tons on Thursday, bringing the total to 977.95 metric tons, the lowest since August 29.
