Bullion surged to around $3,640 an ounce, extending its gaining streak to four consecutive weeks, amid shifting market dynamics. Analysts are projecting a quarter-point interest rate cut this week due to emerging signs of weakness in the labor market. Speculation suggests that further cuts may follow into next year, a perspective that has significantly impacted Treasury yields, which have plummeted to their lowest levels in months. This decline in yields, alongside a weakening U.S. dollar, has made gold more appealing to investors. Lower yields diminish the opportunity cost of holding non-yielding assets like gold, while a weaker dollar enhances its affordability for buyers using other currencies.
The crucial question remains whether the central bank will confront these market expectations, as this week’s decisions and comments could provide clarity for investors. Analysts Daniel Hynes and Soni Kumari from ANZ Group Holdings noted that forthcoming macroeconomic data is likely to overshadow ongoing tariff-related news. Investors are particularly focused on how U.S. tariffs could shape economic growth and inflation figures in the coming months.
This year, bullion has experienced a remarkable rally of nearly 40%, recently breaking out of a range-bound period to surpass an inflation-adjusted record. The surge has been fueled by persistent geopolitical uncertainties, the Trump administration’s tariff strategies, and significant purchases by central banks globally, all of which have provided a substantial backing for the precious metal. As the market navigates these multifaceted challenges, the future trajectory of gold prices remains a critical focal point for investors.
