Gold price maintains stability near its highest levels

SadaNews - The gold price has maintained its stability near its all-time highs, despite a slight decline, as investors assess positive economic data from the United States and mixed statements from Federal Reserve officials have added ambiguity to interest rate cut expectations.

The spot price of gold recorded $3,743.09 per ounce on Thursday morning in Singapore, up 0.2%, after declining by 0.7% in Wednesday's session. It peaked this week at $3,791.10 per ounce, approaching a new record level.

Prices fell after data showed a surprise jump in new home sales in the United States during August, registering the fastest pace since early 2022, alleviating fears about a slowdown in the American economy. At the same time, the dollar index rose to its highest level in two weeks, making gold more expensive for most buyers.

Mixed signals from the Federal Reserve

U.S. Treasury Secretary Scott Posen said on Wednesday that he is "disappointed" that Fed Chairman Jerome Powell has yet to set a clear agenda for interest rate cuts. Powell had reiterated earlier in the week a "cautious" approach to decision-making amid signs of a weak labor market and ongoing inflationary risks.

Typically, precious metals benefit from a low-interest-rate environment, as they are non-yielding assets.

Support from central banks and funds

The rise in gold this year is supported by a series of factors, most notably the interest rate cut last week and increased demand from central banks, including reports of a Chinese plan to assume the role of custodian for foreign sovereign gold reserves, which has boosted interest in the metal.

Gold-backed exchange-traded funds have also witnessed strong inflows, reaching a three-year high last Friday. According to Bloomberg data, the holdings of these funds increased by 400 tons since the beginning of the year, excluding May.

Anticipation for personal spending data

The focus is now turning to the U.S. personal spending report due out on Friday, which is considered the Fed's preferred inflation gauge. Expectations suggest a slowdown in growth for this indicator, which could enhance the chances of interest rate cuts in the coming months.

In other markets, silver and platinum showed little change, while palladium rose. Meanwhile, the Bloomberg dollar index fell by 0.1% after rising 0.6% in the previous session.