Gold price soars to record high amid rising Fed rate cut expectations

Gold price surged to a record high above $2,550 as US data strengthened expectations of an upcoming Federal Reserve rate cut. Currently, XAU/USD is trading at $2,552, up 1.67% from a daily low of $2,511, News.Az reports citing FXStreet.

The US Labor Department revealed that Initial Jobless Claims for the week ending September 7 rose as expected, increasing above the previous week’s reading. Other data showed that prices paid by producers, known as factory inflation, rose above estimates due to higher costs in services.

After the data, the US Dollar Index (DXY), which tracks the buck’s performance against its peers, dived to a daily low of 101.44 and lost 0.29%. On the contrary, US Treasury yields rose, with the 10-year T-note gaining three and a half basis points (bps) and sitting at 3.689%.

A source quoted by Reuters noted, “We are headed towards a lower interest rate environment, so gold is becoming a lot more attractive... I think we could potentially have a lot more frequent cuts as opposed to a bigger magnitude.”

The CME FedWatch Tool shows that market participants are pricing an 85% chance of the Fed lowering rates by 25 basis points and a 15% odds of a 50 bps cut.

Besides US data fueling expectations for the Fed’s first cut, the European Central Bank (ECB) lowering rates by a quarter of a percentage point sponsored a rally on the EUR/USD and weighed on the Greenback’s value.

Bullion traders will examine the Consumer Sentiment survey released by the University of Michigan on Friday.

News.Az