Year-to-date, gold has appreciated by nearly 25%, buoyed by the Federal Reserve’s accommodative monetary policy. Central bank purchases and strong demand for safe-haven assets amid ongoing geopolitical tensions in the Middle East and Ukraine have also contributed to gold’s ascent. Additionally, increasing interest from retail investors is supporting the rally.
Traders are also digesting recent US economic data. Thursday’s reports indicated a rise in unemployment benefit claims and a slight increase in August’s producer price index (PPI). However, the components relevant to the Fed’s preferred inflation measure remained subdued.
“The PPI data leaves room for the Fed to consider more aggressive rate cuts in the future,” said Jun Rong Yeap, a market strategist at IG Asia Pte. “The push to a new record high underscores the broader upward trend for gold,” with a potential target of $2,670 per ounce.
Increased investor activity in gold, including a reduction in bearish positions, may also be driving prices higher. Data shows that gross short positions in Comex gold futures reached a four-week high as of September 3.
Chris Weston, head of research at Pepperstone Group Ltd., noted, “Gold is increasingly seen as a hedge in investment portfolios.” He cited the weak labor market report from Thursday as a signal that fund managers may be using gold as a safe haven, potentially boosting prices further if the US economy falters.
As of 10:38 a.m. in Singapore, spot gold was trading at $2,564.05, up 0.2%. The Bloomberg Dollar Spot Index declined by 0.2%, extending its losses from the previous session. Silver, palladium, and platinum also saw gains.
