Gold prices hit another record high on Monday, but by the afternoon, gold had surged to US$2,634 per ounce, surpassing the record set earlier in the day.
Gold made a historic leap last week, breaking through the US$2,600 mark for the first time, a feat attributed to a significant Federal Reserve interest rate cut.
Rising tensions in the Middle East, with renewed strikes between Israel and Hezbollah over the weekend, have further increased demand for the safe-haven metal.
S&P Global PMI data released Monday afternoon provided a fresh boost for gold prices, which rose following figures showing a slowdown in U.S. private sector growth this month.
The report revealed that the manufacturing sector had contracted for the third consecutive month, while service sector growth also decelerated. Additionally, S&P noted the fastest rise in prices in six months.
Analyst Susannah Streeter from Hargreaves Lansdown emphasized the importance of inflation for gold prices. “Gold is predominantly traded in U.S. dollars, so a weaker dollar makes the metal more affordable for buyers, driving up demand,” she explained.
John Meyer, an analyst at SP Angel, noted that gold was benefiting from dollar strength ahead of U.S. PCE inflation data expected this week. He added that Saudi Arabia’s central bank had increased its gold purchases, suggesting other central banks are buying gold in anticipation of a weaker U.S. dollar. “In a world of uncertainty, gold remains a default go-to,” Meyer said.
Gold ($2,615/oz) holds near record highs as dollar strengthens before PCE data
- Gold prices rallied again into the end of last week, breaking through $2,600/oz and hitting record highs of $2,631/oz.
- The dollar strengthened this morning against a basket of currencies as disappointing European data weighed on the Euro.
- Treasuries have continued to sell off after hitting overbought territory in the run up to the Fed 50bp decision.
- PCE ‘Personal Consumption Estimate’ data will be watched this week for further clues, as the market now expects two 25bp cuts in November and December.
- Analysis of import statistics from Switzerland indicates buying by Saudi Arabia.
- We believe other central banks have been buying gold in anticipation of a weaker US dollar. In an uncertain and changing world gold is a go-to default.
- The PBoC says it has not been a buyer of gold since May but Indian and Chinese investors have been buyers.
- Indian gold imports hit a record $10.06bn (~131t) in August helping prices higher after a 9% cut in import tariffs according to estimates by MetalsFocus.
- Reports indicate strong demand for gold jewellery in India.
Although China’s central bank hasn’t bought gold since May, Meyer pointed out that investors in India and China continue to be active buyers. Indian gold imports surged to a record $10.06 billion in August, driven by a 9% cut in import tariffs and strong demand for gold jewelry, according to estimates from MetalsFocus.
