Gold prices rose in European trading on Friday, moving into positive territory for a second consecutive session, supported by the current weakness in the US dollar against a basket of global currencies as markets price in a high probability of a Federal Reserve rate cut next week.
To reprice those expectations, investors are awaiting the long-delayed US Personal Consumption Expenditures report later today, which had been postponed due to the government shutdown.
The PCE report is the Federal Reserve’s preferred inflation gauge.
Price Overview
• Gold today: Prices rose by 0.55% to $4230.81, from an opening at $4207.44, after touching a low of $4194.85.
• On Thursday, gold settled up 0.1%, resuming gains after a two-day pause caused by profit-taking from the six-week high at $4264.60 per ounce.
US Dollar
The dollar index declined on Friday by 0.25%, resuming losses after a brief pause yesterday and moving close to a five-week low, reflecting continued weakness in the US currency against major global peers.
US Interest Rates
• A stream of weak US economic data continues, particularly regarding job openings in the world’s largest economy.
• Fed officials, including New York Fed President John Williams and Governor Christopher Waller, signaled that easing policy in December may be justified given labor-market weakness.
• Kevin Hassett — now the leading candidate to replace Jerome Powell — stated that interest rates should be lower.
• According to CME’s FedWatch tool, markets currently price an 87% probability of a 25 basis-point rate cut in December, with a 13% chance of no change.
• To reprice these expectations, investors await today’s release of the September PCE report, a key inflation measure closely watched by the Federal Reserve.
Gold Outlook
Kelvin Wong, market analyst for Asia-Pacific at Oanda, said sellers were unable to push gold above Monday’s peak at $4264.60, while the market shows signs of caution ahead of the PCE release.
He added that this pivotal data is pushing short-term traders toward a more defensive stance in adding long positions, with dollar weakness now offering support to gold.
SPDR Holdings
Holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, rose on Thursday by 4.00 metric tons to 1,050.58 metric tons — the highest level since October 22.
