Gold rose as expectations for a US interest rate cut grew, while Deutsche Bank AG joined Goldman Sachs Group Inc. in raising its price forecasts for next year.
Dovish comments from policymakers since last week have revived bets on a December rate cut. The latest US jobless claims data—which showed applications for unemployment benefits unexpectedly fell last week to their lowest level since mid-April—is not expected to deter the Federal Reserve from cutting interest rates next month.
Enhancing the prospect of lower interest rates, a top economic adviser to Donald Trump has emerged as a front-runner to become the next Fed chairman and is seen as someone who will implement the president's approach to monetary policy. Gold typically benefits when interest rates are low, as it does not pay interest.
Swap traders now see an 81% chance of a quarter-point Fed rate cut next month and support three more by the end of 2026. A week ago, traders were expecting only three rate cuts in total.
Gold has consolidated above the $4,000 per ounce threshold after retreating from last month's peak above $4,380 per ounce. The precious metal—on track for its best annual performance since 1979—has risen more than 55% this year, driven by central bank buying and strong retail demand thanks to the so-called debasement trade, where investors flee sovereign debt and currencies.
Deutsche Bank raised its gold forecast for 2026 to an average of $4,450 per ounce for the year, up from $4,000 previously. Goldman Sachs last month raised its forecast for the end of next year to $4,900 per ounce from $4,300, citing ETF inflows and central bank buying. "The positive structural picture suggests inelastic demand from central banks and ETF investment is diverting supply from the jewelry market," Deutsche analyst Michael Hsueh wrote in a note on Wednesday.
Hsueh also said third-quarter supply-demand data supports continued central bank purchases, and the latest decline suggests the $3,900 per ounce support level will hold.
Spot gold rose 0.7% to $4,160.34 per ounce as of 10:51 a.m. in New York. The Bloomberg Dollar Spot Index fell 0.2%. Silver rose 2%, while platinum and palladium also strengthened. (alg)
Source: Bloomberg
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