XAU/USD: Gold Climbs Above $2,350 to Exit Consolidation as Traders Bet on Rate Cuts

Markets are pivoting to a rate-cut narrative after latest US data showed a sharp rise in weekly jobless claims.

• Gold prices XAUUSD were rising early Friday, quietly exiting a three-week long consolidation area with a lid at $2,350. Gold bugs pushed the yellow metal out of that range to a session high of $2,370 per ounce, up for a second day in a row. With this recent rise, the safe-haven asset is just about 3% from its all-time record of $2,430 logged on April 12. What’s driving fresh gains?
• US data released Thursday helped solidify expectations that America’s job market is cooling as intended. The weekly jobless claims — initial filings for unemployment benefits — rose to 231,000, the highest level in eight months. Investors read this as a sign of a shifting market, especially after April’s nonfarm payrolls data showed a notable softening to 175,000 new hires added.
• Gold is a non-yielding asset and it is sensitive to interest rates. If the Federal Reserve decides to lower rates (as expected), gold could increase its appeal because low rates diminish the opportunity cost of holding an asset that doesn’t generate passive returns. In other words, investors won’t miss out much by choosing gold over the US dollar, for example. Another key report is coming next week — inflation data for April.