Gold prices continued their upward trajectory, marking their seventh consecutive daily rise and hitting new record highs on Thursday. The surge was propelled by weak US economic data and signals from Federal Reserve Chair Jerome Powell, hinting at potential rate cuts in the coming months if inflation shows signs of easing.
As of 0432 GMT, spot gold climbed 0.5% to reach $2,159.79 per ounce after reaching an unprecedented peak of $2,161.09 earlier in the session. Meanwhile, US gold futures added 0.4%, reaching $2,167.00.
While marginal weakness in US data provided a reason for gold’s rally, some analysts, including Marcus Garvey, head of the commodities strategy team at Macquarie, noted that the magnitude of the movement appeared disproportionately large. Garvey suggested that large futures buying, initiated on Friday, might have influenced the significant surge.
Federal Reserve Chair Jerome Powell’s indications of potential interest rate cuts in the coming months, combined with evidence of declining inflation, contributed to gold’s boost. Lower rates enhance the attractiveness of non-yielding bullion.
Powell’s remarks, along with data revealing a softening in the labor market conditions, led to a decline in US Treasury yields and the dollar, increasing gold’s appeal.
Macquarie’s Garvey mentioned that if upcoming labor market data or next week’s US inflation data indicates any weakness, the short-term target for gold could be $2,300 based on technical levels. However, he emphasized that this surge might be short-lived, anticipating price corrections and consolidation.
Jigar Pandit, head of commodity and currency business at BNP Paribas’ Sharekhan, anticipates continued central bank buying due to geopolitical uncertainty. He highlighted strong demand, particularly from China, Turkey, Russia, and Poland.
In the precious metals market, spot silver rose 0.4% to $24.25, platinum experienced a 0.1% decline to $906.82 per ounce, and palladium slipped 0.8% to $1,033.44.
