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The price of gold reached another record high on Monday, driven by recent purchasing managers index (PMI) data that provided a boost to this safe-haven asset. By the afternoon, gold climbed to approximately US$2,634 per ounce, surpassing earlier records set that day.
The surge followed last week’s milestone, where gold exceeded the US$2,600 mark for the first time, largely influenced by the Federal Reserve’s significant interest rate cut. Heightened tensions in the Middle East have further fueled demand for gold, particularly following the recent escalation of conflict between Israel and Hezbollah.
Monday's S&P Global PMI data added momentum to gold prices, revealing a slowdown in US private sector growth. The manufacturing sector has now experienced three consecutive months of contraction, while growth in services has also decelerated. Notably, the report indicated the fastest increase in prices observed in six months, signaling inflationary pressures that are critical for gold's value.
Analyst Susannah Streeter from Hargreaves Lansdown emphasized the relationship between inflation and gold prices. She noted that as gold is predominantly traded in US dollars, any decline in the dollar can make gold more affordable for international buyers, thus boosting demand.
John Meyer from SP Angel highlighted that gold is receiving support from a strengthening dollar ahead of anticipated US PCE inflation data. He noted an uptick in gold purchases by Saudi Arabia’s central bank and suggested that other central banks might also be acquiring gold in anticipation of a weaker US dollar. Meyer remarked that in a world marked by uncertainty, gold remains a preferred choice for many.
While China's central bank has not increased its gold holdings since May, there has been a surge in purchases from Indian and Chinese investors. Indian gold imports reached a record value in August, spurred by a reduction in import tariffs, with demand for gold jewelry remaining robust in the country.
Overall, the interplay of geopolitical tensions, inflation data, and central bank activities continues to shape the dynamics of the gold market, solidifying its status as a critical asset in uncertain times.
