Gold prices surged over 1% on Friday, driven by favorable U.S. inflation data and increased safe-haven demand due to heightened geopolitical tensions in the Middle East. The latest Producer Price Index (PPI) report solidified expectations of a Federal Reserve rate cut next month, further bolstering gold’s appeal as the U.S. dollar retreated from recent highs.
Spot gold climbed 1.1% to $2,658.42 per ounce by mid-afternoon trading, marking its second consecutive session of gains. U.S. gold futures followed suit, closing 1.4% higher at $2,676.30 per ounce.
Daniel Pavilonis, senior market strategist at RJO Futures, commented, “The U.S. economy remains relatively strong, but the Fed finds itself in a delicate position. With sectors like housing slowing significantly, a rate cut is on the horizon.” This sentiment was echoed by Jim Wyckoff, senior market analyst at Kitco Metals, who noted, “PPI data supports the expectation of at least two quarter-point rate cuts this year, which has been favorable for the precious metals market.”
The favorable inflation outlook comes after Thursday’s data showed U.S. consumer prices rose only slightly more than expected in September, marking the smallest annual inflation increase in over three-and-a-half years. With inflation concerns still present and geopolitical uncertainties intensifying, Pavilonis predicts that gold could reach $3,000 by 2025.
The dollar’s retreat from a two-month high against a basket of major currencies added further support to gold’s upward momentum.
In addition to these factors, the physical demand for gold is also on the rise. In India, gold dealers reported charging premiums for the first time in two months as festival season jewelry purchases began to pick up.
Commerzbank highlighted the return of gold ETFs as a key contributor to the metal’s renewed demand. “Gold ETF holdings rose by nearly 95 tons in the third quarter, making a positive contribution to demand for the first time in ten quarters,” the bank stated in a note.
Other precious metals also saw gains, with spot silver increasing 1.1% to $31.54 per ounce and platinum climbing 1.9% to $986.15. Palladium, however, dipped 0.5% to $1,063.55 but still managed a strong weekly increase of nearly 5%.
As gold remains a focal point for investors seeking stability in uncertain times, the combined impact of inflation data, Federal Reserve policy, and geopolitical tensions will likely keep the precious metal in the spotlight.
Related topics:
The Future of Gold Prices: Navigating Trends and Factors
