Gold prices climbed over 1% to set a new record high on Thursday, buoyed by expectations of an interest rate cut by the Federal Reserve next week, following US data that indicated a slowdown in the economy.
In early trading in New York, spot gold rose 1.6% to $2,551.19 per ounce, while US gold futures increased by 1.4% to $2,578.90. In Thailand, selling prices were reported on Thursday afternoon at 40,250 baht per baht-weight (15.2 grams).
The US Labor Department announced that initial claims for state unemployment benefits rose by 2,000, reaching a seasonally adjusted total of 230,000. US producer prices also saw a slightly larger-than-expected increase in August, attributed to rising service costs, although the overall trend remained indicative of easing inflation.
“We are moving towards a lower interest rate environment, making gold much more appealing. I think we could see more frequent cuts, rather than a single, larger reduction,” said Alex Ebkarian, Chief Operating Officer at Allegiance Gold.
Current market pricing suggests an 87% likelihood of a 25-basis-point rate cut when the Federal Reserve convenes on September 17 and 18, with a 13% chance of a 50-basis-point cut, according to the CME FedWatch tool.
Gold, which does not yield any interest, tends to be favored by investors in periods of lower interest rates.
“The labor market continues to weaken, and if it deteriorates further, the Fed may embark on an extended period of rate cuts,” said Phillip Streible, Chief Market Strategist at Blue Line Futures.
