Written by The Banking Post
Gold prices rose on Friday, hovering near record highs reached earlier this week, as signs of a slowing US labor market reinforced expectations that the Federal Reserve will deliver its first rate cut of 2025 next week.
Spot gold increased 0.4 percent to $3,648.55 per ounce as of 2:25 p.m. EDT, close to Tuesday’s all-time high of $3,673.95. The metal has gained 1.7 percent this week and is on track for a fourth consecutive weekly advance. US December gold futures rose 0.3 percent to settle at $3,686.40.
“Weaker employment and spotty inflation… priced in with the Fed having to cut rates is pushing metals higher because there is the risk of longer-term inflation,” said Daniel Pavilonis, senior market strategist at RJO Futures.
Recent data showed a rise in jobless claims and soft nonfarm payrolls, along with revisions that cut 911,000 jobs over the past year, pointing to cooling momentum in the US economy. While consumer prices posted their sharpest monthly gain in seven months in August, investors are focusing more on labor market weakness in shaping expectations for interest rates.
Fed fund futures fully price in a 25-basis-point cut at the September 17 meeting, with the probability of a larger 50-bps move easing.
UBS analyst Giovanni Staunovo said, “Given these tailwinds and following the recent step higher in exchange-traded fund flows (ETFs), we now look for gold to rise to $3,900/oz by mid next year.”
Gold has surged 39 percent so far in 2025, benefiting from lower interest rates and acting as a hedge against inflation and market uncertainty. Meanwhile, China’s central bank invited public feedback on proposals to simplify gold import and export rules by streamlining licensing procedures.
