Gold prices continued to hit new historical highs on Friday, extending the nearly 2% rise on Thursday, as the US dollar weakened further ahead of the widely expected Fed interest rate cut next week.

As of the time of writing, gold has risen by nearly 0.4% during the day and briefly reached the $2570 mark, currently experiencing some pullback, but is expected to surge by 3% this week.

Since the beginning of the year, the price of gold has risen by about a quarter, benefiting from the gradual easing by the Federal Reserve, central bank buying, and strong safe-haven demand sparked by conflicts in the Middle East and Ukraine. At the same time, retail investors' interest is also on the rise.

Traders are also weighing the two US data releases from Thursday, which showed an increase in jobless claims and a slight rise in the August PPI index. However, the data categories included in the Fed's preferred inflation indicator performed flatly.

It is worth noting that after the release of the 'Fed's throat-clearing', traders raised their bets on a 50 basis point rate cut from the Fed on September 18 from about 28% before the publication to 41%.

IG analyst Tony Sycamore stated, 'This is another turning point in the Fed rate cut debate. Everyone thought we were back on track for a 25 basis point cut, and suddenly now it's back to 50 basis points.'

Jun Rong Yeap, market strategist at IG Asia Limited, said that the PPI data "leaves room for the Fed to consider larger interest rate cuts in the future." "The gold price sets another historical high, consolidating the overall upward trend of precious metals." He predicts that after breaking through its range, gold may rise to a target of $2670 per ounce.

Closing out short positions on gold by investors may also drive up the price of gold. According to the latest data, hedge funds' total short positions in gold futures on the New York Mercantile Exchange reached their highest level in four weeks as of the week ending September 3. Chris Weston, research director at Pepperstone Group Limited, said:

"Currently, gold is being used more as a hedging tool in investment portfolios. The weak labor market report on Thursday suggests that fund managers may see gold as a place to store funds in the event of a weakening US economy, which will further drive up the price of gold."

Editor / jayden