New York.- Gold rose to a record high after U.S. inflation data and a rise in unemployment claims supported bets that the Federal Reserve will cut interest rates next week, Bloomberg reported.
The producer price index for final demand rose 0.2 percent from the previous month after a downward revision to the July reading, according to a Bureau of Labor Statistics report released Thursday.
The median forecast in a Bloomberg survey of economists called for a 0.1 percent increase. Initial jobless claims rose 2,000 to 230,000 in the week ended Sept. 7, according to Labor Department data. The median estimate in a Bloomberg survey of economists called for 226,000 claims.
Treasury yields and the dollar fell after the readings, pushing bullion up 1.6 percent to a new record of $2,551.72 an ounce.
Spot gold rose 1.4 percent to $2,547.02 in New York. Earlier, the European Central Bank cut interest rates for the second time this year, with inflation retreating toward 2 percent and concerns about the economy developing. That pushed the euro higher against the dollar, weighing on a gauge of greenback strength. “A cocktail including an ECB rate cut, small pickups in jobless claims and PPI has been enough to send gold to a new record,” said Ole Hansen, head of commodity strategy at Saxo Bank. Swaps traders have consolidated bets on a quarter-point cut by the Federal Reserve at its meeting next week after Wednesday’s consumer goods index rebounded in August. For the gold market, “the start of a rate-cut cycle is likely to add support,” regardless of the size of the cut, Hansen added. Lower rates are typically positive for non-interest-bearing bullion. Investors buying back previously built bearish bets on gold also contributed to the metal’s rise. Money managers’ gross short positions in Comex gold futures stood at their highest level in four weeks in the week ended Sept. 3, according to the latest CFTC data. Bullion is up more than a fifth this year, with its recent strength coming on the back of rising expectations that the Federal Reserve will soon embark on a tapering cycle. Strong central bank buying and solid over-the-counter demand have also contributed to the precious metal’s rally.
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