World gold prices increased sharply

ByEditor

Oct 12, 2024

US inflation data reinforces the possibility of interest rate cuts next month, helping gold prices increase by more than 20 USD for the second consecutive session.

Closing the October 11 trading session, the world spot gold price increased by 27 USD per ounce to 2,657 USD. This is the second consecutive session the market has gone up. In just 2 sessions, the price increased by 50 USD.

US inflation data helps strengthen the possibility that the Federal Reserve (Fed) will reduce interest rates next month, thereby pulling gold higher. The need for shelter is also maintained due to geopolitical tensions in the Middle East. Gold price increased yesterday even though the USD was still around a 2-month high compared to a basket of major currencies.

World gold prices increased sharply in the last 2 sessions. Graph: Kitco

“The economy is still relatively strong. However, the Fed still has to consider reducing interest rates due to a rapid deceleration in some sectors, such as real estate,” said Daniel Pavilonis – senior market strategist at RJO Futures. .

The US producer price index (PPI) was almost unchanged in September, showing that the outlook is still tilted towards inflation, reinforcing expectations that the Fed will reduce interest rates next month. On October 10, the US also announced the consumer price index (CPI), showing the lowest price increase since the beginning of 2021.

“The PPI report supports the possibility of gold price increases. The Fed is still forecast to reduce interest rates two more times, each time by 25 basis points (0.25%) this year,” Jim Wyckoff – market analyst at Kitco Metals said.

Pavilonis forecasts that gold will reach 3,000 USD in 2025, due to geopolitical tensions, inflation concerns and instability related to the US Presidential election.

On the physical market, gold traders in India this week raised prices for the first time in 2 months, due to the country’s upcoming holiday season. The demand for buying gold jewelry here will increase. India is currently the world’s leading gold consuming market.

Reserves in gold ETFs also increased by 95 tons in the third quarter. This is the first time in 10 quarters that this group is expected to increase gold demand, Commerbank said.