NEW YORK - Gold prices rose more than 1% to reach a record high on Thursday, helped by expectations of an interest rate cut by the Federal Reserve next week after US data signalled a slowing of the economy.
Spot gold was up 1.6% at $2,551.19 per ounce in early trade in New York, while US gold futures were up 1.4% at $2,578.90. Thai selling prices were quoted on Thursday afternoon at 40,250 baht per baht-weight (15.2 grammes).
The US Labor Department said initial claims for state unemployment benefits rose by 2,000 to a seasonally adjusted 230,000. US producer prices increased slightly more than expected in August amid higher costs for services, but the trend remained consistent with subsiding inflation.
“We are headed towards a lower interest rate environment so gold is becoming a lot more attractive. I think we could potentially have a lot more frequent cuts as opposed to a bigger magnitude,” said Alex Ebkarian, chief operating officer at Allegiance Gold.
Markets are currently pricing in an 87% chance of a 25-basis-point rate cut when the Federal Reserve meets on Sept 17 and 18, and a 13% chance of a 50bps cut, the CME FedWatch tool shows.
Zero-yield gold tends to be a preferred investment amid lower interest rates.
“The labour market is continuing to falter and if the labour market deteriorates, the journey that they’ll embark on in cutting rates is going to go for an extended period of time,” said Phillip Streible, chief market strategist at Blue Line Futures.
