Gold prices soared 1% on Friday, marking their strongest weekly performance since early April, fueled by U.S. economic data that heightened expectations of an impending interest rate cut by the Federal Reserve.
The spot gold price reached $2,369.35 per ounce by 0708 GMT, hitting its highest level in over two weeks, with a cumulative 3% increase for the week. U.S. gold futures also climbed 1.5% to $2,375.60.
The latest data, released on Thursday, revealed a higher-than-anticipated rise in Americans filing new unemployment claims, adding to concerns about the tightening jobs market. This follows weaker nonfarm payroll figures from last Friday, suggesting a potential loosening in employment conditions.
“Gold has regained its momentum this week due to softer U.S. macroeconomic data. The disappointing initial jobless claims figures, coupled with the recent weaker nonfarm payrolls, indicate a potential shift in the job market,” remarked Tim Waterer, Chief Market Analyst at KCM Trade.
Traders are anticipating the Federal Reserve to initiate an easing cycle starting in September, with lower interest rates reducing the opportunity cost of holding gold.
The upcoming inflation reports, including the U.S. producer price index and consumer price index data next week, hold significant weight in shaping expectations for the Fed‘s rate-cutting timeline. Waterer noted that gold stands to benefit if inflation trends lower.
Addressing inflation uncertainties, San Francisco Fed President Mary Daly highlighted “considerable” uncertainty about future inflation trajectories during Thursday’s remarks.
Meanwhile, geopolitical tensions persist, with a senior Israeli official announcing the end of indirect negotiations in Cairo to halt hostilities in Gaza, signaling continued geopolitical risks that could outweigh positive economic news from China.
In the broader metals market, spot silver rose 0.9% to $28.60 per ounce, platinum firmed 1.2% to $989.95, and palladium added 1.4% to $980.75. All three metals posted gains for the week, underscoring sustained strength in demand for precious metals amidst evolving economic and geopolitical dynamics.
