Gold headed for a fourth weekly gain on expectations the Federal Reserve is poised to lower US interest rates, with prices aided by inflows into bullion-backed exchange traded funds.
The precious metal traded near $3,650 an ounce, up about 1.7% this week, after setting a record in Tuesday’s session. Silver, which can move in tandem, topped $42 an ounce to hit the highest since 2011.
The latest data on Friday showed consumer sentiment fell in September to the lowest since May and long-term inflation expectations rose for the second straight month. The data added to concerns about the labor market and price pressures, with traders maintaining their bets that the US central bank will cut rates next week. Bullion typically benefits in a lower rate environment
Gold has rallied by nearly 40% this year, making it one of the best performing commodities, and outpacing other market gauges including the S&P 500 Index. The surge has been supported by central-bank buying, geopolitical uncertainties and inflows into ETFs. In addition to setting a nominal record this week, gold also surpassed its inflation-adjusted peak set more than 45 years ago.
Bullion-backed ETFs have expanded by almost 17 tons as of Thursday, according to data compiled by Bloomberg.
UBS Group AG raised its price target for gold to $3,800 an ounce by the end of the year from $3,500, citing elevated gold ETF buying, lower rates and dollar weakness. The bank sees bullion at $3,900 by mid-2026.
“As gold’s negative correlation with the USD remains elevated, the greenback’s ongoing depreciation should boost investment demand, with participants using the metal as a hedge,” UBS analysts including Wayne Gordon wrote in a note. “US President Donald Trump’s desire for lower policy rates also lifts gold’s appeal.”
Prices traded 0.4% higher at $3,648.51 an ounce at 2:54 p.m. in New York. The Bloomberg Dollar Spot Index was little changed. Silver rose by 1.7% to $42.2625 an ounce. Palladium headed for a weekly gain of almost 9%, while platinum rose above $1,400 an ounce.
(By Yihui Xie and Jack Ryan)