Spot Gold held close to an all-time high of $3,673.95/oz. on Friday and was on course for its fourth straight weekly advance, as concerns over a weakening US labor market outweighed inflation woes prior to the Federal Reserve’s policy meeting.
Annual headline consumer inflation in the US has picked up to 2.9% in August from 2.7% in July, in line with market consensus.
And, annual core CPI inflation has steadied at 3.1% in August.
Yet, initial jobless claims surged to 263,000 last week, indicating US labor market conditions softened markedly. The data followed last week’s employment report, which revealed a considerably slower than anticipated US job growth in August.
Markets are now pricing in about a 93% chance of a 25 basis point Fed rate cut next week and a 7% 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.
“Now the market is looking for a high chance of at least three interest rate cuts before 2025 ends, which is much more than earlier projections from two months ago,” OANDA senior market analyst Kelvin Wong was quoted as saying by Reuters.
Spot Gold was last up 0.29% on the day to trade at $3,644.66 per troy ounce.
The precious metal has risen 1.62% so far this week.
Year-to-date, the yellow metal has surged 39%.
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