Gold prices rose slightly in European markets on Thursday, extending gains for the sixth consecutive session and trading near record highs, on course to surpass the $3,900 per ounce barrier for the first time in history, supported by the continued decline in US dollar levels in the foreign exchange market.
In addition, strong expectations remain that the Federal Reserve will cut interest rates twice before the end of this year. To reprice those expectations, markets await the release of more key data on the state of the US labor market, which the Fed relies heavily upon in shaping its monetary policy tools.
Price Overview
Gold prices today: gold rose by 0.25% to $3,874.83, from the opening level at $3,865.62, with a low of $3,852.94.
At Wednesday’s settlement, gold prices gained 0.2%, marking a fifth straight daily increase, and recorded an all-time high at $3,895.34 per ounce.
US Dollar
The dollar index fell on Thursday by 0.15%, extending losses for the sixth consecutive session and nearing its lowest level in several weeks, reflecting the continued decline in US currency levels against a basket of global peers.
This drop comes amid a series of weak US labor market data, which strongly reinforces expectations for two Fed rate cuts this year, alongside ongoing concerns over the government shutdown.
US Interest Rates
Data on Wednesday showed that US private companies unexpectedly lost jobs in September, marking a second consecutive monthly decline.
The Job Openings and Labor Turnover Survey (JOLTS) report on Tuesday indicated slight growth in openings during August, along with a slowdown in hiring, suggesting weakening labor market strength.
Traders increased their bets on the Federal Reserve cutting interest rates two more times this year.
Following the above data, and according to the CME FedWatch tool: market pricing for a 25 basis point Fed rate cut in October rose from 90% to 99%, while the probability of rates staying unchanged fell from 10% to 1%.
To further reprice these expectations, markets now await the release of more key US labor data, including weekly jobless claims later today, and Friday’s nonfarm payrolls report for September.
Gold Outlook
Matt Simpson, senior analyst at City Index, said: weak ADP employment data ahead of the nonfarm payrolls report revived bets on Fed rate cuts to weaken the US dollar. He added that gold also received a boost from the US government shutdown.
Goldman Sachs stated in a note: the upside risks to our gold price forecast of $4,000 per ounce by mid-2026, and $4,300 per ounce by December 2026, have increased further due to speculative positioning and the sharp surge in holdings of Western exchange-traded funds (ETFs).
SPDR Fund
Gold holdings with SPDR Gold Trust, the world’s largest gold-backed ETF, rose by 6.01 metric tons yesterday, marking a fourth consecutive daily increase. Total holdings climbed to 1,018.89 metric tons, the highest level since July 13, 2022.
