Gold News: Gold Price Soars to All-Time High as Dollar Weakens and Yields Slide

Gold Hits Record High as Dollar and Yields Drop

Gold surged to an all-time high of $3,600.21 on Friday, posting its strongest weekly gain in nearly four months. The rally was ignited by sharply weaker U.S. jobs data that reinforced expectations of Federal Reserve rate cuts this month. With spot prices breaking above the key psychological barrier of $3,600, technical traders now view a sustained trade above $3,600.21 as a clear signal of uptrend continuation.

U.S. nonfarm payrolls rose by just 22,000 in August, far below the expected 75,000. The unemployment rate climbed to 4.3%, and ADP private payrolls also missed expectations earlier in the week. As a result, the benchmark 10-year Treasury yield dropped to 4.076%, its lowest since April, while the 2-year yield plunged to 3.509%, a five-month low.

Federal Reserve Rate Cut Bets Surge After Soft Labor Data

Traders are now pricing in a 90% chance of a 25-basis-point rate cut at the Fed’s September 17 meeting, with a 10% probability of a larger 50-basis-point cut, according to the CME FedWatch tool. The Fed is under increasing pressure, both politically and economically, with President Biden’s attempted intervention in Fed appointments casting fresh attention on the central bank’s independence.

Gold, which pays no interest, typically gains during low-rate environments and heightened uncertainty. With real yields falling and the labor market cooling rapidly, rate-sensitive assets like gold are drawing strong institutional flows.

US Dollar Weakens Broadly, Fueling Gold’s Rally

The U.S. dollar index fell 0.48% to 97.767 on Friday. It posted losses against major currencies, including a 0.91% decline against the Swiss franc and a 0.70% drop versus the yen. Stagflation fears are now gaining traction among traders, further undermining confidence in the greenback. “What today truly establishes is that we are experiencing very serious stagflation,” said Juan Perez of Monex USA.

Physical Demand Slows in Asia as Prices Spike

While paper gold rallied, physical demand in top consumer markets China and India fell back this week, with buyers hesitating at record-high prices. However, central bank activity remains in focus. Markets await China’s latest gold reserves data, due Sunday, which could offer more clarity on official demand trends.

Market Forecast: Bullish Outlook for Gold Prices

With the labor market showing clear signs of fatigue and real yields pulling back, the gold market remains structurally supported.

Technically, $3,600.21 is now the key breakout level, while downside support stands at $3511.75 and the major line at $3500.20. Failure there opens the door to $3455.88, but buyers are expected to emerge on dips. The short-to-medium term gold prices forecast remains bullish as traders price in looser Fed policy and a weaker dollar.

More Information in our Economic Calendar.