Gold prices are on track for a fourth consecutive weekly increase, buoyed by market expectations that the Federal Reserve is likely to lower interest rates in the U.S. Prices for gold have surged past $3,650 an ounce, marking nearly a 2% rise this week following a record high set during Tuesday’s trading session. Silver has also seen significant gains, surpassing $42 an ounce—its highest point since 2011.
Recent data released on Thursday indicated that U.S. consumer prices rose as anticipated in August. This has provided Federal Reserve policymakers with the flexibility to consider decreasing borrowing costs, especially in light of recent weak labor market reports. Market participants are currently anticipating at least one quarter-point rate cut during next week’s Fed meeting, with potential for additional cuts to follow by the year’s end.
The U.S. dollar and 10-year Treasury yields have both experienced declines this week. Generally, lower interest rates, decreasing yields, and a weaker dollar favor precious metals like gold. Gold has rallied nearly 40% this year, making it one of the best-performing commodities and outpacing benchmarks such as the S&P 500 Index. This impressive rise can be attributed to factors including central bank purchasing, geopolitical uncertainties, and increased inflows into exchange-traded funds (ETFs) tied to bullion.
Notably, gold has not only achieved a nominal record this week but has also surpassed its inflation-adjusted peak that was set over 45 years ago. Given that gold has more than doubled in value over the past three years, market analysts suggest that a buy-and-hold investment strategy may become increasingly risky at current price levels. Priyanka Sachdeva, an analyst at Phillip Nova Pte, stated that investors may become more inclined to respond to short-term market movements rather than committing to long-term positions, indicating that price action could remain vibrant and unpredictable.
Silver could also experience heightened interest, particularly from investors seeking a more affordable option to enter the rising precious metals market. Bullion-backed ETFs have reportedly increased by almost 25 tons this week, according to Bloomberg data.
Gold’s upward momentum has also been influenced by President Trump’s attempts to assert authority over the U.S. central bank. On Thursday, he requested that an appeals court pause a lower-court ruling that had blocked his effort to remove Fed Governor Lisa Cook on allegations of mortgage fraud. The administration is seeking a decision by Monday, just one day before the Fed policymakers convene for their September meeting.
As of 12:46 p.m. in Singapore, gold is trading 0.6% higher at $3,654.38 an ounce. The Bloomberg Dollar Spot Index is slightly up but is still positioned for a weekly loss of 0.3%. Meanwhile, other precious metals are also on the rise, with palladium expected to gain almost 8% for the week and platinum edging closer to the $1,400 per ounce mark.
