Gold prices are hovering near record highs, spurred by weaker-than-expected inflation data in the United States. This has reinforced expectations of further interest rate cuts by the US Federal Reserve. Bullion traded near $US4335 an ounce and is on track for its second consecutive weekly gain. The core US consumer price index (CPI) has risen at its slowest rate since early 2021, according to the latest figures released on Thursday. This data strengthens the argument for reduced borrowing costs, which is typically beneficial for non-yielding assets like precious metals.
However, the recent inflation report was somewhat complicated by the record six-week government shutdown that concluded last month. Despite delivering its third consecutive rate cut last week, the US Federal Reserve has remained unclear regarding the future pace of monetary easing. Market analysts currently estimate around a 25 per cent probability of a rate reduction in January. US President Donald Trump has been a vocal advocate for aggressive rate cuts in the coming year.
Geopolitical tensions in Venezuela have also contributed to gold’s upward trajectory this week. President Trump’s order to blockade all sanctioned oil tankers has intensified pressure on Caracas, amidst an increased American military presence in the region. These factors combined have increased demand for safe haven assets like gold.
Gold experienced a 0.1 per cent increase, reaching $US4335.15 an ounce, and has risen by 0.8 per cent for the week. In October, it achieved an all-time high, surpassing $US4381.
