Gold prices surged by 1% on Friday, positioning themselves for their most robust weekly performance since early April. This upswing follows the release of U.S. economic data that bolstered expectations of an imminent interest rate reduction from the Federal Reserve.
At 0708 GMT, spot gold ascended by 1% to reach $2,369.35 per ounce, marking its highest level in over two weeks. Throughout the week, prices have recorded a notable 3% increase. Concurrently, U.S. gold futures witnessed a 1.5% rise, reaching $2,375.60.
The surge in gold prices coincided with Thursday’s revelation that the number of Americans filing new claims for unemployment benefits surpassed initial projections.
Tim Waterer, Chief Market Analyst at KCM Trade, remarked, “Gold has regained its momentum this week owing to softer U.S. macro data. Initial jobless claims figures were worse than expected, following weaker Nonfarm Payrolls (NFP) figures last Friday, signaling a potential loosening in the job market.”
Market analysts anticipate the Federal Reserve to initiate an easing cycle in September. This expectation stems from the understanding that lower interest rates diminish the opportunity cost associated with holding gold.
Waterer further noted the significance of inflation reports in influencing the expected timeline for rate cuts, suggesting that if inflation were to decrease, gold could experience further gains. The U.S. Producer Price Index and Consumer Price Index data are slated for release next week.
San Francisco Fed President Mary Daly expressed uncertainty regarding the trajectory of inflation in the coming months during a Thursday statement. Meanwhile, discussions in Cairo aimed at halting hostilities in Gaza concluded, with Israel announcing its intent to continue operations in Rafah.
Despite optimistic developments in China’s economic outlook, analysts at ANZ underscored that enduring geopolitical risks are likely to outweigh such positivity. They predicted that gold demand would maintain relative strength throughout 2024.
In the precious metals market, spot silver climbed by 0.9% to $28.60, platinum strengthened by 1.2% to $989.95, and palladium increased by 1.4% to $980.75. All three metals recorded gains for the week.