Gold Records Weekly Gains Supported by US Inflation Data
Gold recorded significant weekly gains at the close on Friday, September 26, influenced by US inflation data that aligned with market expectations, reinforcing investors' belief that the US Federal Reserve will continue its path of interest rate cuts before the end of the year.
On Friday, the price of gold in the spot market jumped by 0.8% to reach $3777.79 per ounce, marking a weekly increase of about 2.5%, after touching a record level of $3790.82 earlier in the week. Meanwhile, US gold futures for December delivery rose by 1% to settle at $3807.90 per ounce.
The main driver for this rise came from the Personal Consumption Expenditures Price Index report for August, which is the Fed's preferred inflation measure, showing core inflation stable at a seasonally adjusted annual rate of 2.9%, matching economists' expectations. The all-items index also showed an annual rate of 2.7% with a monthly increase of 0.3%, which was also within expectations.
Despite these indicators, the strength of recent economic data has eased expectations for a sharp interest rate cut. In this regard, Han Tan, senior market analyst at Exinity, said: "Gold prices are stabilizing around the $3700 range, considering the latest indicators of the US economy, which reduces the likelihood of interest rate cuts by the Federal Reserve by the end of 2025, with these odds dropping by up to 18 percentage points this week."
Indeed, investor expectations have declined, as the CME FedWatch tool now indicates an 87% probability of a rate cut in October and 62% in December, down from 91% and 76% respectively before the data was released.
Gold movement was also affected by the rise of the dollar index to its highest level in three weeks, making it more expensive for investors outside the US, amid strong economic data that included a decline in unemployment claims and accelerating economic growth in the second quarter.
In terms of other metals, the movement was mixed as spot silver fell by 0.5% to $45.01, while platinum jumped by 0.6% hovering around $1539.44 near a 12-year high, and palladium stabilized at $1250.40, all heading for weekly gains.
