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(Bloomberg) – Gold traded near all-time highs as the latest U.S. economic data maintained bets that the Federal Reserve will cut interest rates.
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U.S. retail sales were strong in September, well above expectations, according to data released Thursday by the Commerce Department. Meanwhile, U.S. jobless claims unexpectedly fell after spiking last week in southeastern states affected by Hurricane Helen, according to the latest report from the U.S. Department of Labor.
U.S. Treasury yields and the dollar rose on the economic report, and gold bullion pared some of its early gains after hitting a new high of $2,687.67 an ounce. A drop in the euro after the European Central Bank cut interest rates for the third time this year early on Thursday also supported the dollar’s strength.
A mixed report on recent U.S. economic data has strengthened gold traders’ expectations that the Fed will continue its policy of lowering interest rates through the end of the year.
“These were good data points,” said Bob Haberkorn, senior market strategist at RJO Futures. “I think the Fed wants to lower rates. We’ll probably see at least another quarter point before the end of the year, which means rates should come down and gold should get stronger.”
The precious metal also has strong support due to ongoing tensions in the Middle East. Israel said Hamas leader Yahya Sinwar may have been killed in an operation in Gaza as part of a new offensive against the militant group after more than a year of war in the Palestinian territories.
Low interest rates tend to benefit interest-free bullion.
Gold is up 1.1% this week as investors readjust their portfolios ahead of the Nov. 5 U.S. presidential election. Regardless of whether Donald Trump or Vice President Kamala Harris wins, gold is likely to gain further support as both candidates present different risks to the economy. .
Bullion is one of the best-performing commodities, up more than 30% this year. Optimism about rate cuts fueled the recent rally when the Federal Reserve began its easing cycle last month. Strong purchases by central banks are also supporting gold.
As of 9:50 a.m. in New York, spot gold was up 0.5% at $2,685.52 an ounce. The Bloomberg Dollar Spot Index rose 0.1%. Silver, palladium, and platinum rose slightly.
—With assistance from William Clowes and Sybilla Gross.
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