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Gold prices climbed in Asian trading on Friday, approaching record highs as concerns over an economic slowdown spurred investors to seek safe haven assets. This trend was supported by a combination of interest rate speculation, geopolitical tensions, and weak economic data.
Safe Haven Buying and Interest Rate Speculation
The surge in gold prices was primarily driven by safe haven buying, as fears of an economic downturn led investors to flock to the yellow metal. Spot gold rose by 0.5% to $2,458.49 per ounce, while gold futures expiring in December increased by 0.9% to $2,502.60 per ounce as of 01:18 ET (05:18 GMT).
Expectations of U.S. interest rate cuts also played a significant role. Bets on rate cuts weakened the dollar and dented Treasury yields, making gold more attractive. The Federal Reserve’s recent indication of potential interest rate cuts in September further fueled these expectations.
Geopolitical Tensions
Heightened tensions in the Middle East added to the safe haven demand. The assassination of a Hamas leader in Tehran sparked fears of a wider Middle East conflict, driving investors towards gold.
Weekly Performance and Future Outlook
Gold prices are set to add over 3% this week, marking their best performance since March. The yellow metal benefited from safe haven demand as weak purchasing managers index (PMI) and employment data from the U.S. ramped up concerns over a slowdown in the world’s largest economy. This data triggered steep declines on Wall Street, which spilled over into Asian trade and sparked a broad risk-off move, fueling safe haven bids for gold.
Market focus is now on the upcoming U.S. nonfarm payrolls data for further cues on the economy. A cooling labor market could increase the likelihood of interest rate cuts by the Federal Reserve, which would be favorable for gold prices, as lower rates decrease the opportunity cost of investing in non-yielding assets.
Other Precious Metals
Platinum futures rose by 0.7% to $977.25 per ounce, while silver futures jumped by 1.6% to $28.925 per ounce.
