Gold prices surged early on Friday, breaking out of a three-week consolidation phase with a peak at $2,350. The precious metal, often favored in uncertain times, reached a session high of $2,370 per ounce, marking a second consecutive day of gains and inching closer to its all-time high of $2,430 recorded on April 12.
The latest catalyst for gold’s upward momentum came from U.S. economic data released on Thursday, which underscored concerns about a softening job market. Weekly jobless claims, an indicator of new unemployment benefit filings, soared to 231,000, reaching their highest level in eight months. This uptick followed April’s nonfarm payrolls report, which revealed a noticeable slowdown in hiring with only 175,000 new jobs added.
Gold, considered a safe-haven asset, is particularly sensitive to interest rates. The prevailing expectation that the Federal Reserve will move to lower rates further enhances gold’s appeal. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive compared to assets that generate passive returns, such as the U.S. dollar.
Investors are closely monitoring the upcoming inflation data for April, scheduled for release next week. This report will provide additional insights into the Federal Reserve’s monetary policy trajectory, further shaping the market sentiment towards gold as a hedge against inflationary pressures and economic uncertainty.
