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Gold Hits All-Time High as Inflation Softens, Fed Rate Cut Anticipation Grows

Arslan Butt•Friday, September 13, 2024•1 min read

Gold prices surged to an all-time high of $2,570 during Friday’s Asian session, fueled by weaker-than-expected US Producer Price Index (PPI) data.

Gold
Gold

The report, showing a cooling inflation environment, has increased expectations for a Federal Reserve rate cut at its upcoming September meeting. This bolstered gold’s appeal, particularly as US Treasury yields dipped to their 2024 lows and the US Dollar weakened.

The PPI report showed annual headline inflation rising by 1.7%, slightly below expectations of 1.8%, while core PPI (excluding food and energy) rose by 2.4%, below the anticipated 2.5%. These figures contributed to the speculation that the Fed could cut interest rates by as much as 50 basis points.

Additionally, gold demand has been driven by heightened geopolitical tensions in the Middle East and ongoing conflict between Russia and Ukraine. Israel has increased airstrikes on Iranian-linked targets in Syria, while Hamas and Hezbollah launched a massive attack on northern Israel.

These developments, coupled with Russia’s warnings about Ukraine’s missile strikes, have further strengthened gold’s status as a safe-haven asset.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart – Source: Tradingview

Looking Forward: Fed Watch

As investors await Friday’s Preliminary Michigan US Consumer Sentiment Index, caution remains. However, gold’s upward momentum suggests strong weekly gains. With the CME Group’s FedWatch Tool indicating a 40% chance of a 50 basis-point rate cut, gold is likely to remain attractive.

 

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ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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