• Gold hits new all-time high as US jobless claims and producer inflation data reinforce a likely Fed rate cut.
• US Dollar Index (DXY) falls 0.29%, while US Treasury yields rise, with the 10-year T-note at 3.689%.
• CME FedWatch Tool shows an 85% chance of a 25 bps Fed rate cut, further boosting Gold’s appeal in a low-rate environment.

Gold price rallied to new all-time highs above $2,550 after US data reinforced that the US Federal Reserve (Fed) would likely lower interest rates next week. At the time of writing, the XAU/USD trades at $2,552 after bouncing off a daily low of $2,511 to gain 1.67%.

Sentiment is upbeat as Wall Street posts gains. The US Labor Department revealed that Initial Jobless Claims for the week ending September 7 rose as expected, increasing above the previous week’s reading. Other data showed that prices paid by producers, known as factory inflation, rose above estimates due to higher costs in services.

After the data, the US Dollar Index (DXY), which tracks the buck’s performance against its peers, dived to a daily low of 101.44 and lost 0.29%. On the contrary, US Treasury yields rose, with the 10-year T-note gaining three and a half basis points (bps) and sitting at 3.689%.

A source quoted by Reuters noted, “We are headed towards a lower interest rate environment, so gold is becoming a lot more attractive... I think we could potentially have a lot more frequent cuts as opposed to a bigger magnitude.”

The CME FedWatch Tool shows that market participants are pricing an 85% chance of the Fed lowering rates by 25 basis points and a 15% odds of a 50 bps cut.