FX.co ★ Gold Extends Record Setting Run

Gold prices continued their upward momentum on Wednesday, trading above $4,630 per ounce. This surge is attributed to market evaluations of a balancing act between diminishing inflationary pressures and sustained demand in the US. Recent data indicates that producer prices in November did not exceed expectations, with the core Producer Price Index (PPI) remaining stable for the month. This aligns with the recently released Consumer Price Index (CPI), suggesting that inflation pressures are abating.

This backdrop has reinforced anticipation that the Federal Reserve might implement two to three rate cuts this year, benefiting gold as uncertainty around policy decisions persists. Simultaneously, strong retail sales data highlighted vigorous consumer spending but didn’t significantly alter the momentum of gold’s rise.

Demand for gold as a safe-haven asset remains strong, fueled by concerns over the Federal Reserve's independence, following legal scrutiny related to Chair Powell's testimony in June. Additionally, ongoing geopolitical tensions, particularly involving Iran, continue to bolster support for the metal.