Gold price remains below record high – Mixed signals cause uncertainty

The gold price remains near its record high as traders face positive US economic data and differing opinions from the Federal Reserve that obscure the path for potential rate cuts. The price of an ounce of gold rose slightly, reaching nearly $3,745, just $50 below the record set on Tuesday. After an unexpected rise in US new home sales in August, prices fell on Wednesday. The units sold reached the highest pace since early 2022, dispelling some concerns about a cooling US economy. This week, the dollar climbed to its highest level in almost two weeks, making gold more expensive for most buyers. Investors also processed comments from US officials: Treasury Secretary Scott Bessent expressed disappointment that Fed Chair Jerome Powell had not yet set a clear agenda for rate cuts. The US central bank chief reiterated earlier this week the need for cautious action due to a weakening labor market and the risk of higher inflation. Lower rates generally favor precious metals that do not pay interest. Gold and silver are among the most successful commodities this year, due to a variety of supportive factors, including the Fed's rate cut last week and strong demand from central banks. On Tuesday, prices rose by as much as 1.2% to a high of $3,791.10 after Bloomberg News reported on China's plans to become managers of foreign state gold reserves. Strong interest in gold was also observed in the ETF sector, with net inflows reaching a three-year high last Friday. Year-to-date, gold-backed holdings have seen increases every month, except for May, and have risen by a total of 400 tons according to Bloomberg data. Looking ahead, traders will watch the upcoming release of the US Personal Consumption Expenditures Price Index on Friday. This Fed-preferred measure of core inflation is expected to have grown more slowly last month, which would strengthen the case for rate cuts. The spot gold price rose by 0.2% to $3,743.09 an ounce by 7:50 am in Singapore, after falling by 0.7% on Wednesday. The Bloomberg Dollar Spot Index fell by 0.1%, after rising by 0.6% in the previous session. Silver and platinum showed little movement, while palladium gained.