Gold prices continued to climb in European afternoon trading after U.S. data showed producer prices remained unchanged in September, signaling a further slowdown in inflation. Gold futures increased by 1.1%, reaching $2,669.50 per troy ounce. According to Paul Ashworth, Chief North America Economist at Capital Economics, “September’s data may lead some Federal Reserve officials to reconsider the size of their recent rate cut, which was a more aggressive 50 basis points.” Ashworth expects a more modest 25 basis-point reduction at the upcoming Federal Open Market Committee (FOMC) meeting in early November. Market experts attribute gold’s rise to a favorable macroeconomic environment and a surge in demand for safe-haven assets, driven by ongoing conflicts in the Middle East and Ukraine.
Gold Rises on Weaker Dollar and Mixed U.S. Data
Earlier in the day, gold prices also saw gains during European trading, buoyed by a weaker U.S. dollar and mixed economic data from the United States. As investors increasingly expect a 25 basis-point rate cut from the Federal Reserve in November, gold futures rose by 0.7%, trading at $2,658.20 per troy ounce. While inflation cooled to 2.4% in September, it decelerated more slowly than anticipated. Additionally, U.S. jobless claims reached their highest level in over a year, primarily due to disruptions from Hurricane Helene and the Boeing machinist strike, rather than broader economic weakness. Traders are now awaiting the release of core producer price index (PPI) data for more insights into future interest rate decisions and the state of the U.S. economy.
Gold Edges Higher Amid Lower Dollar and Treasury Yields
In early Asian trading, gold prices edged higher, supported by a weaker U.S. dollar and lower Treasury yields. These factors typically boost the appeal of gold, which does not yield interest. Ruben Ferreira, Head of Portuguese Operations at FlowCommunity, noted that geopolitical tensions continue to provide additional support for gold. “The potential for further escalation in these tensions could drive increased demand for safe-haven assets, lifting gold prices,” Ferreira said. Spot gold was trading 0.2% higher at $2,633.70 per ounce in the early hours of the session.
