Key Takeaways:
- Gold prices surged over 1 per cent to an all-time high on Thursday, driven by expectations of an interest rate cut by the Federal Reserve.
- Spot gold rose 1.6 per cent to $2,551.19 per ounce, with U.S. gold futures climbing 1.4 per cent to $2,578.90.
- Gold prices are expected to remain range-bound until the Federal Reserve’s policy announcement next week.
- The U.S. Labor Department reported a rise in initial claims for state unemployment benefits, contributing to the expectation of a rate cut.
- Markets are factoring in an 87 per cent probability of a 25-basis-point rate cut at the September 17-18 Fed meeting.
Gold Prices Reach All-Time High on Rate Cut Expectations
Gold prices surged over 1 per cent to reach an all-time high on Thursday, driven by growing expectations of an interest rate cut by the Federal Reserve next week following U.S. data indicating a slowing economy. As of 9:46 a.m. ET (1346 GMT), spot gold had risen 1.6 per cent to $2,551.19 per ounce, while U.S. gold futures climbed 1.4 per cent to $2,578.90.
What’s Behind the Rally?
The U.S. Labor Department reported that initial claims for state unemployment benefits rose by 2,000 to a seasonally adjusted total of 230,000. In August, U.S. producer prices increased slightly more than anticipated due to higher service costs, though the overall trend aligns with easing inflation. According to the CME FedWatch tool, markets are factoring in an 87 per cent probability of a 25-basis-point rate cut at the Federal Reserve’s September 17-18 meeting, with a 13 per cent chance of a 50-basis-point reduction.
Other Precious Metals
Palladium rose 2.7 per cent to $1,035.69 per ounce, reaching its highest level in over two months. Spot silver climbed 2.3 per cent to $29.35, and platinum advanced 1.8 per cent to $968.48. Traders attributed the increase in palladium to a short-covering rally following comments from Russian President Vladimir Putin suggesting export restrictions on certain metals in response to Western actions.