September 13, 2024
New Delhi, India
Gold Prices
Gold prices (XAU/USD) continued their upward momentum for the second consecutive day, reaching a new all-time high around the $2,565-$2,570 level during the European session on Friday. The recent gains are driven by rising expectations for a larger interest rate cut by the Federal Reserve (Fed) next week, following softer-than-expected US Producer Price Index (PPI) data released on Thursday.
Key Factors Driving the Surge:
- US Inflation Data and Fed Rate Cut Expectations:
- The US PPI report indicated that inflation pressures are easing, with the annual headline PPI rising 1.7% against the forecasted 1.8%, while the previous month’s figure was revised down to 2.1%.
- The core PPI, which excludes volatile food and energy prices, also came in below expectations at 2.4% YoY, further pointing to subsiding inflation.
- These signs of easing inflation have led to increased market speculation of a 50-basis point rate cut by the Fed, with over a 40% chance now priced in according to the CME Group’s FedWatch Tool.
- Decline in US Dollar and Treasury Yields:
- The softer inflation data has triggered a fresh decline in US Treasury yields, weighing on the US Dollar, which reached a one-week low. This has bolstered demand for the non-yielding yellow metal, pushing gold prices higher.
- Geopolitical Tensions:
- Heightened geopolitical risks, including ongoing conflicts in the Middle East and tensions stemming from the Russia-Ukraine war, have driven investors toward safe-haven assets like gold. Recent escalations include intensified Israeli airstrikes on Iranian-linked targets in Syria and attacks by Hamas and Hezbollah on northern Israel, alongside threats from Russia regarding Western-supplied missiles to Ukraine.
- Market Outlook Ahead of Central Bank Decisions:
- While the gold price has confirmed a bullish breakout from a multi-week-old trading range, investors may remain cautious ahead of key central bank meetings next week. The Fed’s decision on Wednesday will be followed by the Bank of England (BoE) and Bank of Japan (BoJ) meetings on Thursday and Friday, respectively.
Investor Focus Shifts to Consumer Sentiment Data:
- Investors are now looking forward to the release of the Preliminary Michigan US Consumer Sentiment Index for further short-term opportunities. Despite the cautious sentiment ahead of central bank meetings, gold remains on track for strong weekly gains.
Gold prices have surged to new record highs, supported by rising expectations of a larger Fed rate cut and increased geopolitical tensions. As markets await further economic data and central bank decisions, the yellow metal is likely to remain a focal point for investors seeking safe-haven assets.
Disclaimer:
CurrencyVeda provides this news article for informational purposes only. We do not offer investment advice or recommendations. Before making any investment decisions, please conduct thorough research, consult with financial experts, and carefully consider your financial situation, risk tolerance, and investment goals. Investing in the stock market carries risks, and it’s essential to make informed choices based on your individual circumstances. CurrencyVeda is not liable for any actions taken based on the information provided in this article.
