Throughout the week, economic data releases further supported the case for continued rate cuts. The Personal Consumption Expenditures (PCE) price index—a critical measure of inflation—rose 0.1% month-over-month in August and 2.2% year-over-year, slightly below economists’ expectations of 2.3%. The core PCE index, which excludes food and energy, also rose by 0.1% for the month and 2.7% year-over-year, in line with forecasts. These inflation readings reinforced the outlook that the Fed could cut rates again by the end of the year, as inflation remains close to the central bank’s 2% target.
Meanwhile, jobless claims fell more than expected, and durable goods orders remained flat, further indicating resilience in the U.S. economy despite the Fed’s aggressive rate cuts.
Geopolitical Tensions Boost Safe-Haven Demand
In addition to the Fed’s actions, ongoing geopolitical tensions, particularly in the Middle East, provided strong support for gold prices. Conflict between Israel and Hezbollah escalated last week, with Israeli airstrikes in Lebanon further heightening risk sentiment. Investors seeking refuge from potential global instability increased their exposure to gold, pushing demand higher. Analysts expect these geopolitical risks to persist, keeping gold’s safe-haven appeal intact.
ETF Inflows and Central Bank Demand Support Gold’s Bullish Trend
Another key factor driving gold’s rally has been the return of inflows into gold-backed exchange-traded funds (ETFs)
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