Spot Gold held in proximity to an all-time high of $3,673.95/oz. on Wednesday, supported by expectations of a Federal Reserve interest rate cut this month.
Markets are now pricing in about a 92% chance of a 25 basis point Fed rate cut in September and an 8% chance of a super-sized 50 basis point cut.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
The US producer price inflation figures, due later in the day, and US CPI inflation data on Thursday are now on investors’ radar for more clues over the Federal Reserve’s monetary easing path.
“Sentiment is really bullish. There are several major factors driving gold prices right now. The primary is U.S. rate cut expectations,” Capital.com financial market analyst Kyle Rodda was quoted as saying by Reuters.
“The near-term outlook depends a lot on this inflation data. If it comes out a bit spicy, then rate cuts could come out of the curve marginally and spark a pullback in what’s a technically overbought market.”
US employers likely added 911,000 fewer jobs in the 12 months through March than previously estimated, government data showed on Tuesday.
Spot Gold was last up 0.42% on the day to trade at $3,641.59 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Year-to-date, the yellow metal has surged 38%.
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