Gold Holds Firm Near Record as Markets Await Inflation Data

Highlights:

• Gold Near Peak: Prices hovered close to record highs, supported by weaker-than-expected U.S. producer price data.
   
• Fed Policy Bets: Softer inflation signals strengthened expectations of interest rate cuts by the Federal Reserve.
   
• Investor Demand: Safe-haven flows and rising inflows into gold-backed ETFs added momentum to the rally.

Gold Holds Near Record Levels

Gold prices stayed near all-time highs as disappointing U.S. producer price data fueled speculation that the Federal Reserve will soon lower rates. Bullion was trading at around US$3,642 an ounce in early Thursday trade in Singapore, roughly US$32 below the all-time high set earlier this week.

Rate-Cut Bets Strengthen

Producer prices in the U.S. fell for the first time in four months, reinforcing market conviction that borrowing costs will be lowered at the Federal Reserve’s September 16–17 policy meeting. Investors are currently pricing in a quarter-point cut as almost certain, with the possibility of two additional reductions before the end of the year. With gold offering no yield, lower interest rates tend to enhance its appeal relative to bonds and other income-generating assets. The next critical test for traders will be the release of U.S. consumer inflation data later Thursday, which could further shape expectations for monetary easing.

Strong Year for Gold

Gold has already gained nearly 40% year-to-date, cementing its position as one of the best-performing commodities of 2025. Central bank stockpiling, geopolitical risks, and ongoing uncertainty over U.S. tariffs have all fueled demand. The surge has been further fueled by increased demand for gold-backed exchange-traded funds, with investors turning to the metal as a safe haven amid signs of a softening labor market. Adding to the supportive environment, political tension in Washington has indirectly bolstered gold’s role as a haven. President Donald Trump is appealing a court ruling that allowed Federal Reserve governor Lisa Cook to remain in her role while facing a legal dispute, underscoring the political spotlight on the central bank’s independence. At the time of writing, gold was trading at US$3,642 an ounce, little changed from Wednesday’s 0.4% gain.

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