Gold Rises to a New Record Level Following U.S. Jobs Data

SadaNews - The price of gold has reached a new record level after U.S. jobs data came in weaker than expected, as the precious metal is on track to post weekly gains for three consecutive weeks, thanks to increased bets on interest rate cuts by the Federal Reserve later this month.

The price of an ounce of gold reached approximately $3,586.82 at 1:57 PM London time, rising by 1%, breaking its all-time high of $3,578.51 per ounce recorded last Wednesday, when a decline in job openings bolstered market expectations for an interest rate cut in September.

The drop in borrowing costs enhances the appeal of gold, which also receives support from strong demand as a safe-haven investment amid concerns about the future of the Federal Reserve.

This indicates further weakness in the labor market, as U.S. Treasury yields fell to their lowest levels in several months after data on Thursday showed that the number of unemployment claims rose to its highest level since June.

Possibility of Interest Rate Cut This Month

Despite technical indicators suggesting that gold prices reached extremely high levels this week, the metal has seen an increase of more than one-third of its value so far this year, making it one of the best-performing commodities. This recent rise followed comments made last month by Federal Reserve Chairman Jerome Powell, cautiously indicating the possibility of an interest rate cut.

Both gold and silver have more than doubled in the past three years, driven by rising risks in international politics, the economy, and global trade. The intensity of U.S. President Donald Trump’s attacks on the Federal Reserve has increased this year, raising concerns about the central bank's independence, as the President promised to secure a majority on the central bank's board "very soon" and to lower interest rates.

However, some of these concerns have faded after Stephen Moore, whom Trump nominated for a position on the Federal Reserve Board, stated during a Senate committee hearing on Thursday that one of the central bank's primary tasks is to prevent economic crises and rising inflation. Moore reiterated his commitment to the central bank's independence while acknowledging his continued position in the White House.

Investors are also awaiting a historic ruling on whether President Donald Trump has the right to dismiss Lisa Cook, a member of the Board of Governors, which could allow him to appoint a replacement who adopts a more liberal monetary policy.

Gold Poised to Reach $5,000

In this context, analysts at Goldman Sachs wrote in a note this week that the price of gold could reach $5,000 per ounce if the independence of the Federal Reserve is affected and a small portion of investors' capital moves from Treasury bonds to precious metals.

In contrast, silver has performed even more impressively this year, with its price rising by more than 40%. On Monday, it surpassed $40 an ounce for the first time since 2011. Silver is considered a precious metal due to its value as a financial asset and for industrial purposes in renewable energy technologies, including solar panels. Consequently, the Silver Institute expects the silver market to experience a supply deficit for the fifth consecutive year.

Investor interest in exchange-traded funds based on silver has increased, as the portfolios of these funds expanded for the seventh consecutive month in August. This has led to a depletion of available silver stocks in London, causing a market shortage.

Silver leasing rates, which reflect the cost of borrowing for a short period, rose to over 5% this week, exceeding their normal levels near zero.