Gold Maintains Gains Near Record High Supported by Inflation Data and Interest Rate Cut Expectations

Gold prices traded near $4,320 per ounce on Friday, maintaining proximity to the historical high recorded in October and heading for a second consecutive weekly gain, supported by the slowdown in inflation in the United States and strengthened expectations for further interest rate cuts.

Data showed that the U.S. inflation rate dropped to 2.7% in November, lower than the expected 3.1%, while core inflation fell to 2.6%, marking the slowest pace since March 2021. These figures reinforced market confidence that price pressures are gradually easing, strengthening the rationale for the Federal Reserve to lower interest rates in the coming period.

However, investors noted that the recent data was partially incomplete due to disruptions in price data collection during October caused by the U.S. government shutdown, which limited the availability of detailed monthly readings.

Markets Price in Rate Cuts

Current market pricing indicates about a 25% chance of an interest rate cut in January, with a strong likelihood of a cut by April, which supports gold as a non-yielding asset.

Geopolitical Tensions Boost Demand

In addition to monetary factors, ongoing geopolitical tensions continued to support the precious metal, amid U.S. moves to halt sanctioned Venezuelan oil shipments following an incident involving a seized tanker, as well as renewed tensions in Ukraine after Russian President Vladimir Putin reaffirmed regional demands.

Exceptional Annual Performance

On an annual basis, gold has risen approximately 65% since the beginning of the year, marking the strongest annual gains since 1979, reflecting its status as a safe haven during periods of economic and financial uncertainty.