24K99 News: On Thursday (September 12th),the spot gold price surged nearly 2%,hitting a record high.

Analysts pointed out that the euro/dollar strengthened after the European Central Bank's (ECB) decision,thereby suppressing the US dollar index,coupled with US data indicating a slowdown in the economy,enhancing market expectations for the Federal Reserve to cut interest rates next week,leading to a surge in gold prices.

Spot gold closed up $47.30 on Thursday,a 1.88% increase,at $2,558.58 per ounce; the highest price touched during the session was $2,560.15 per ounce,setting a new record high.

US data strengthens expectations for a Fed rate cut.

FXStreet analyst Christian Borjon Valencia noted that after the US initial jobless claims and producer inflation data further indicated that the Fed might cut rates next week,gold prices soared above the historical high of $2,550 per ounce.

The CME's "FedWatch" tool showed an 85% chance of a 25 basis point rate cut by the Fed,which further boosted gold's appeal in a low-interest-rate environment.

The US Department of Labor reported on Thursday that initial jobless claims rose for the first time in three weeks,revealing signs of a slowing job market.

The report stated that for the week ending September 7th,initial jobless claims were 230,000,an increase of 2,000 from the previous reporting period,higher than the market-anticipated 225,000.

Phillip Streible,Chief Market Strategist at Blue Line Futures,said,"The labor market continues to be sluggish,and if the labor market worsens,this upcoming journey of rate cuts will last for a long time."

Another data set on Thursday showed that the US Producer Price Index (PPI) for August rose 1.7% year-on-year,below the expected 1.8%; while core PPI rose 2.4% year-on-year,also below the expected 2.5%.

Valencia said that Thursday's data,along with Wednesday's Consumer Price Index (CPI),solidified the news of a 25 basis point rate cut,driving gold prices higher ahead of the Fed meeting.

Gold traders will be watching the consumer confidence survey to be released by the University of Michigan on Friday.

Alex Ebkarian,Chief Operating Officer of Allegiance Gold,said,"We are heading towards a lower interest rate environment,making gold more attractive.

I think there will be more frequent rate cuts rather than larger ones."

Since gold does not bear interest,a decrease in interest rates can reduce the opportunity cost of holding gold,increasing its investment appeal.

ECB decision hits US dollar index Valencia said that in addition to US data intensifying expectations for the Fed's first rate cut,the news of the ECB cutting rates by 25 basis points boosted the euro/dollar rebound and suppressed the dollar.

The euro/dollar rose on Thursday as the ECB cut rates,but the central bank's president,Christine Lagarde,downplayed expectations for another rate cut next month,stating that the bank would decide its next policy actions based on economic data.

Due to inflation and slowing economic growth,the ECB cut rates by another 25 basis points on Thursday.

After the ECB rate cut,the market's focus shifted to the future monetary policy path in the Eurozone.

Lagarde said at a press conference,"We will make decisions meeting by meeting.

I won't commit to any specific date,and our policy path is not predetermined."

After the ECB's policy statement,traders reduced their rate expectations for the ECB,predicting another 36 basis points cut by the end of 2024.

Yael Selfin,Chief Economist at KPMG,said,"Looking ahead,the direction of interest rates remains uncertain.

Although the ECB Governing Council generally agrees that policy constraints should be relaxed,there is still disagreement on the pace of rate cuts."

The euro/dollar closed up 0.55% on Thursday,at 1.1071.

The US dollar index (DXY),which tracks the dollar against six major currencies,closed down 0.5% on Thursday,at 101.24.

Ole Hansen,Head of Commodity Strategy at Saxo Bank,said,"The ECB rate cut,a slight increase in initial jobless claims,and a series of factors like PPI were enough to push gold prices to a record high."

Hansen added that for the gold market,the start of a rate cut cycle could add support,regardless of the magnitude of the rate cuts.

The market's growing expectations for the Fed to soon start a rate cut cycle have supported the recent strength in gold prices.

Strong buying from central banks and robust demand from the over-the-counter market have also driven gold higher.

Steve Englander,Head of G10 FX Research at Standard Chartered Bank,said,"Lagarde essentially met the market's expectations for the ECB.

Overall,the market has some risk appetite,and investors are buying back the currencies they previously sold,which usually indicates that risk appetite is recovering."

How to trade gold?

FXStreet analyst Christian Borjon Valencia noted that gold prices surged on Thursday,breaking through the previous historical high of $2,531 per ounce and the $2,550 per ounce level,setting a new historical high.

Although the negative correlation between gold prices and US Treasury yields was broken on the day,the upward momentum of gold prices continued to accelerate.

Valencia said that if gold prices continue to rise,the next resistance level will be the psychological key level,such as $2,575 per ounce,followed by the $2,600 per ounce milestone.

Valencia added that for gold to pull back,sellers must first conquer $2,550 per ounce,then the high touched on August 20th at $2,531 per ounce.

In this case,sellers will target $2,500 per ounce.

If gold prices weaken further,the next support level will be the low of August 22nd at $2,470 per ounce,followed by the high of May 20th at $2,450 per ounce.