Gold Price Continues Surging, as US Consumer Feels Better

XAU finally broke August’s high and made a new high yesterday, but it is not stopping, pushing to new record highs today as well, as the consumer sentiment improves. This year the US consumer has been showing weakness as high FED rates filtered through, but we might have seen the bottom a few months ago. The UoM Consumer Sentiment placed a low a few months back and has been showing signs of improvement in the last two months, with today’s numbers beating expectations.

Spot gold reached a record high today at $2,583.40 per ounce, with buyers continuing to dominate the market. Gold has gained over 25% this year, driven by safe-haven demand amid ongoing geopolitical and economic uncertainties, as well as strong physical demand from central bank purchases. This marks its best annual performance since 2020.

Gold Chart H1 – The 20 SMA Acting As Support

Key factors contributing to gold’s rise:

• Interest rate expectations: According to the CME FedWatch tool, investors are pricing in a 55% chance of a 25-basis-point U.S. rate cut and a 45% chance of a 50-bps cut.
• Weaker US PPI data: The softer-than-expected US Producer Price Index (PPI) report, indicating cooling inflation, has increased the likelihood of a 0.50% Federal Reserve rate cut at the upcoming meeting, further supporting gold’s rally.

Given the current bullish momentum in gold, driven by global uncertainty, central bank rate cuts, and strong physical demand, analysts suggest gold could surpass $3,000 per ounce by the end of 2024.

University of Michigan consumer sentiment Index preliminary for September

• University of Michigan Consumer Sentiment Index for September: 69.0 points vs. 68.5 estimate (prior: 67.9)
  • Best reading since May 2024
• Current Conditions: 62.9 points vs. 61.5 estimate (prior: 61.3)
  • Highest since June 2024
• Expectations: 73.0 points vs. 71.0 estimate (prior: 72.1)
  • Best since April 2024
• 1-year inflation expectations: 2.7% vs. 2.8% last month
  • Back within pre-Covid range (2.3%-3.4%)
• 5-year inflation expectations: 3.1% vs. 3.0% last month
• Reflects improved consumer sentiment and stable inflation expectations.

Gold Live Chart