Gold holds near record high

Gold prices dipped to around $3,630 per ounce on Thursday, easing modestly but holding close to record highs, supported by expectations of US monetary easing and intensifying geopolitical tensions.

The latest US producer price data surprised markets, with both headline and core PPI falling 0.1% in August against forecasts for a modest increase. Combined with earlier signs of a cooling labor market, the data reinforced speculation that the Federal Reserve could cut rates in the near term, keeping investor demand strong for non-yielding assets such as gold.

Traders now await Thursday’s consumer inflation report for confirmation of disinflationary momentum, which could further shape the scale of expected Fed easing.

Beyond macroeconomic drivers, geopolitics continued to add to bullion’s safe-haven appeal. US President Donald Trump urged the European Union to impose tariffs on China and India in an effort to increase pressure on Russia over the war in Ukraine, a move that raised fears of renewed trade tensions and supply chain disruption.

Meanwhile, hostilities in the Middle East escalated, adding another layer of geopolitical risk. In Europe, Poland reported intercepting Russian drones that breached its airspace during a large-scale strike on western Ukraine, highlighting the risks of spillover from the conflict into NATO territory.

Despite Thursday’s pullback, gold remains underpinned by a favorable macro environment. If US inflation data confirms weakening price pressures, markets could increase bets on deeper rate cuts, potentially driving bullion to new record highs.

Conversely, a stronger-than-expected inflation print could temper easing expectations and weigh on prices, though geopolitical risks may limit the downside. Analysts also note that strong central bank buying, led by emerging markets and China in particular, continues to provide structural support to the gold market.