Gold prices rose in European trading on Wednesday, extending their gains for the fourth consecutive session and continuing to set new records, successfully trading above the 4,200-dollar-per-ounce mark for the first time in history.
This surge was supported by a decline in the US dollar against a basket of global currencies, particularly following recent comments by Federal Reserve Chairman Jerome Powell, which strengthened expectations of US interest rate cuts in October and December.
To reassess those expectations, global financial markets are now awaiting the release of key US inflation data for September in the coming days, which will provide further evidence on the path of US monetary easing.
Price Overview
• Gold prices rose by 1.85% to 4,218.23 dollars per ounce, the highest level on record, from an opening price of 4,142.06 dollars, after touching a session low of 4,140.73 dollars.
• At Tuesday’s settlement, gold gained 0.8%, marking its third consecutive daily advance and another record high amid strong safe-haven demand.
US Dollar
The US Dollar Index fell by more than 0.3% on Wednesday, deepening its losses for the second straight session and hitting a one-week low of 98.73 points, reflecting continued weakness of the greenback against a basket of major and minor currencies.
As is well known, a weaker dollar makes dollar-priced gold more attractive to investors holding other currencies.
The dollar’s decline came under pressure from recent remarks by the Federal Reserve chairman, as well as renewed trade tensions between the United States and China.
US Interest Rates
• Jerome Powell said on Tuesday that the labor market remains stagnant, with both hiring and layoffs at low levels, and that the lack of official economic data due to the government shutdown has not prevented policymakers from assessing the economic outlook — at least for now.
• Philadelphia Fed President Anna Paulson stated that rising risks in the labor market reinforce the case for further US interest rate cuts.
• According to CME Group’s FedWatch Tool, markets currently price in a 96% probability of a 25-basis-point rate cut at the October meeting, while the probability of rates remaining unchanged stands at 4%.
• To reassess these probabilities, investors are awaiting the release of key US inflation data for September in the coming days, though the release could be delayed if the government shutdown continues.
Gold Outlook
• Peter Grant, Vice President and Chief Metals Strategist at Zaner Metals, said that escalating trade tensions between the United States and China, the ongoing government shutdown, and expectations of further monetary easing by the Federal Reserve are all factors supporting gold.
• Grant added that US President Donald Trump’s threats to impose 100% tariffs on Chinese goods, reciprocal port duties between the world’s two largest economies, and the broader global shift away from the dollar could push gold prices to 5,000 dollars per ounce by mid-next year.
• Analysts at Bank of America and Société Générale now expect gold to reach 5,000 dollars per ounce in 2026.
SPDR Fund
Gold holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 2.57 metric tons on Tuesday, marking the third consecutive daily increase and bringing total holdings to 1,018.88 metric tons — the highest level since July 12, 2022.
