Gold surged following the latest economic releases, trading at $4,256 by 15:45 GMT on Friday. The yellow metal had been ranging, waiting for a catalyst to break out.
The Commerce Department’s delayed September PCE report showed core inflation rising 0.2% month-on-month and 2.8% year-on-year, slightly lower than August’s 2.9% annual rate. Headline PCE also ticked up 0.3% for the month, bringing the annual rate to 2.8%.
ADP payroll data for November revealed an unexpected net decline of 32,000 jobs, driven primarily by small businesses, while mid-sized and large firms added 90,000 positions on net. These readings pointed to a cooling labor market and further bolstered bets on a Fed rate cut.
The University of Michigan’s consumer sentiment index climbed to 53.3 in early December, slightly above forecasts, while one-year and five-year inflation expectations fell to their lowest levels since January.
Markets now see an 87.2% probability to a 25-basis-point rate cut at the Federal Reserve’s December meeting. Despite the Fed’s internal division on further easing, gold responded strongly to the combination of softer inflation and labor market weakness, pushing above $4,250.