Gold prices surged over 1% to reach an all-time high on Thursday, driven by anticipation of an impending interest rate reduction by the Federal Reserve in the following week, following indications of a slowdown in the U.S. economy from recent data.
The spot price of gold increased by 1.7% to $2,554.05 per ounce, while U.S. gold futures closed 1.5% higher at $2,580.60.
The U.S. Labor Department reported a rise of 2,000 in initial claims for state unemployment benefits, reaching a seasonally adjusted 230,000.
Producer prices in the U.S. saw a slightly higher increase than anticipated in August, attributed to elevated costs for services, although the overall trend aligned with decreasing inflation.
Market expectations currently suggest a 73% likelihood of a 25-basis-point interest rate reduction during the Federal Reserve’s meeting on September 17-18, with a 27% probability of a 50-bps cut, as indicated by the CME FedWatch tool.
During periods of lowered interest rates, zero-yield gold tends to be a preferred investment choice.
