By Frank Walbaum, Market Analyst at Naga
Gold held near record highs on Friday, on track for a fourth consecutive weekly advance as expectations of Federal Reserve easing and persistent geopolitical risks reinforced safe-haven flows.
Recent US data painted a mixed picture. Consumer prices rose 0.4% in August, the biggest increase in seven months, but producer prices unexpectedly fell, while jobless claims climbed to their highest level in four years. Together with last week’s weak payrolls report, the data signalled a softening labour market, keeping markets confident of at least a 25-basis-point cut. A smaller probability of a 50-basis-point move has also been priced in.
Geopolitical tensions added to the bullish sentiment. The interception of Russian drones over Polish airspace raised investors’ concerns. In the Middle East, tensions continued to mount. However, the market may face some price correction risks in the short term following its strong climb. In the meantime, investors could continue to monitor new data releases and the Federal Reserve’s meeting next week, as they may impact the direction of the market.