Gold extends winning streak as investors bet on easier Fed policy

SINGAPORE: Gold prices climbed on Friday, on track for a fourth consecutive weekly gain, as growing concerns about a weakening US labour market overshadowed worries about inflation ahead of an expected interest rate cut by the Federal Reserve next week.

Spot gold was last seen up 0.4 percent at $3,647.76 per ounce during early Asian trade, while US gold futures for December delivery also rose 0.4 percent to $3,686.50. The precious metal has already gained 1.7 percent this week, extending its strong rally.

Rate cut expectations drive demand

Market sentiment has shifted notably in recent weeks, with traders increasingly betting that the Fed could deliver multiple rate cuts over the coming months to support the slowing economy.

“Now the market is looking for a high chance of at least three interest rate cuts before 2025 ends, which is much more than earlier projections from two months ago,” said Kelvin Wong, senior market analyst at OANDA. “This is helping gold at the moment.”

Fresh data this week painted a mixed picture of the US economy. Consumer prices in August rose 0.4 percent, marking the steepest monthly increase in seven months, yet producer prices surprisingly fell. Meanwhile, weekly jobless claims jumped, signalling that the labour market is losing momentum, following a report last week showing job growth had almost stalled in August.

The CME FedWatch tool shows that investors widely expect the Fed to cut its benchmark interest rate by 25 basis points on Wednesday, with a small chance of a larger half-point reduction.

Gold nears record levels

Analysts say gold is likely to keep its momentum if the Fed delivers the expected rate cut. Non-yielding bullion, often viewed as a safe-haven asset during economic uncertainty, tends to benefit in low-interest-rate environments as it becomes more attractive compared with interest-bearing assets.

“It’s not far off from $3,700… so that could happen at any moment,” said Ryan McIntyre, managing partner at Sprott Inc. “In the short term, we see some resistance at about $3,900 according to our technical analysis, but long term, we feel that it is probably still heavily underowned by most institutions.”

Gold hit a record high of $3,673.95 on Tuesday and has now surged around 39 percent so far this year, reflecting strong demand from both retail investors and central banks seeking stability amid market turbulence.

Other precious metals mixed

In the wider precious metals market, spot silver slipped 1.1 percent to $42.03 per ounce, while platinum rose 0.5 percent to $1,385.40 and palladium added 0.9 percent to $1,198.56. All three metals were still set to end the week higher, supported by optimism about looser monetary policy and signs of steady industrial demand.

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