Gold prices powered up to another all-time high on Friday, with the market supported by geopolitical tensions and bets on upcoming interest rate cuts.
Prices hit a new all-time high of $2,330 an ounce on Friday, compared with around $2,290 an ounce in late deals on Thursday. Gold’s price direction showed a dramatic within-day turnaround, with a dip to as low as $2,268 an ounce in Asian hours before rebounding sharply to hit the fresh highs by early evening European time.
Geopolitical factors appeared to be the main driver, with ongoing hostilities in the Middle East and Ukraine injecting a risk premium into the gold price. Ukraine carried out a drone attack against the Morozovsk air base in Russia on Friday, which destroyed six Russian planes and badly damaged a further eight, according to news reports.
On the economic side, US Non-Farm Payrolls figures released Friday showed that the US economy added 303,000 jobs in March, the most in ten months and well above expectations of 200,000. Ordinarily these figures would be expected to be bearish for gold prices as they imply a stronger than expected economy, strengthening the case for a higher-for-longer stance on interest rates by the US Fed.
Nevertheless, gold prices appeared to ignore the latest macro figures, with momentum still with the bulls as prices soared to fresh all-time highs.
US inflation remains a key determinant for gold prices as the US Fed is expected to want to see evidence that inflation has come down towards its target before starting an interest rate cutting cycle. In that context, the markets will be watching out for US inflation figures due out on Wednesday this week to help gauge the path for monetary policy in the coming months.
Frank’s experience covering the commodities markets spans 22 years, with a particular specialism in metals, carbon and energy markets. He has worked as a senior editor for S&P Global Commodity Insights (formerly Platts) and before this, at ICIS-LOR, a part of Reed Business Information (Reed Elsevier), where he covered the petrochemicals markets from 2003 to 2005.
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