Gold rises for the second consecutive day, reaching a new all time high.
The gold price (XAUUSD) attracted some follow-through buyers for the second day in a row on Friday, climbing to a new all-time high near $2,570 during the Asian session.
Rising expectations of a greater Fed rate cut weigh on the USD and enhance the precious metal.
The recent leg higher confirms a positive breakout through a multi-week-old range, and the commodity appears prepared to appreciate further amid mounting wagers on the Federal Reserve more aggressive policy easing. The US producer price is softer than projected. The PPI report issued on Thursday provided additional indications that inflation was decreasing, raising expectations for a greater, 50 basis point Fed rate decrease next week. This, in turn, is seen as a critical element favoring the non-yielding yellow metal.
Meanwhile, dovish Fed predictions keep US Treasury bond rates languishing near 2024 lows, dragging the US Dollar (USD) to a new weekly low.
Geopolitical tensions help to drive flows toward the safe-haven XAUUSD.
Geopolitical dangers arising from ongoing wars in the Middle East and the lengthy Russia-Ukraine war, strengthens the safe-haven gold price and justifies the positive prognosis. Nonetheless, bulls may avoid from taking new wagers before of next week’s important central bank event risks. The Fed scheduled to announce its policy decision on Wednesday, followed by the Bank of England’s (BoE) meeting on Thursday and the Bank of Japan’s (BoJ) policy announcement on Friday. Nonetheless, the XAUUSD remains on course for its first significant advance in three weeks.
Daily Market Movers: Gold price remains maintained by 50 basis points. Fed rate drop predictions, geopolitical risks.
Rising bets of a greater interest rate decrease by the Federal Reserve, combined with geopolitical worries, pushed the gold price to a new all-time high on Friday, confirming a positive breakthrough over a multi-week trading range.
The US Bureau of Labor Statistics stated on Thursday that the annual headline Producer Price Index (PPI) grew 1.7%, compared to predictions of 1.8% and the previous month’s reading reduced to 2.1% from 2.2%.
Furthermore, the core PPI, which excludes volatile food and energy prices, came in at 2.4% year on year, missing predictions of 2.5% and pointing to signs of reducing inflationary pressures in the United States.
Separately, figures released by the US Department of Labor (DoL) showed that the number of people applying for unemployment insurance benefits for the first time increased to 230K in the week ending September 7.
Market participants are now pricing in a more than 40% possibility that the US central bank would reduce borrowing prices by 50 basis points.
According to the CME Group’s FedWatch Tool, market participants are now pricing in a more than 40% possibility that the US central bank would reduce borrowing prices by 50 basis points at the end of its two-day meeting next Wednesday.
Israel increased airstrikes against Iranian-linked targets. Syria, while Hamas and Hezbollah launched one of the heaviest aerial attacks on northern Israel on September 11, raising fears of a larger Middle Eastern clash.
Russian President Vladimir Putin cautioned on Friday that allowing Ukraine to use Western-supplied missiles to hit targets inside Russia would be comparable to NATO directly entering the conflict.
Investors are currently looking forward to the release of the Preliminary Michigan US Consumer Sentiment Index in order to take advantage of short-term chances in the XAUUSD, which is expected to post substantial weekly gains.
