Quick overview

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Gold is expected to rise for a fourth week due to inflows into bullion-backed exchange-traded funds and expectations that the Federal Reserve will cut interest rates in the world’s largest economy.
The bullion asset surged above $3,650 an ounce, up nearly 2 percent this week.

Bloomberg’s data shows that ETFs backed by gold have increased by nearly 25 tons this week.

Price action is likely to remain active but not move in one direction because investors tend to trade headlines and momentum rather than make long-term commitments. Data released on Thursday indicated that US consumer prices increased as anticipated in August, giving Fed policymakers the flexibility to lower borrowing costs.

Metal  traders have priced in at least one quarter-point cut at the Fed’s meeting next week, with two more potentially coming by the end of the year. This week, the 10-year Treasury yields and the US dollar have declined. Generally speaking, the precious metal gains from lower borrowing costs, declining yields, and a weaker dollar.

Gold has significantly outperformed other market indicators, such as the S&P 500 Index, and is currently one of the best-performing commodities, having risen by almost 40% this year.

Central bank purchases, geopolitical unpredictability, and ETF inflows have all contributed to the surge. Gold not only surpassed its inflation-adjusted peak set over 45 years ago, but it also hit a nominal record this week.