Gold reached a historic high on Friday as global stock markets saw gains, driven by reassuring data about the health of the world’s largest economy and the likelihood of US interest rate cuts.
Traders pointed to the weakening dollar due to expectations of US interest rate cuts, while oil prices dropped amid concerns about weak Chinese demand despite ongoing tensions in the Middle East.
The spot price of gold soared to a record high of $2,509.41 an ounce as investors sought the safe haven of this investment in light of the increasing probability of a US interest rate cut in September and escalating geopolitical risks.
“The sharp decrease in bond yields in anticipation of Fed rate cuts” has pushed gold prices higher, according to City Index and FOREX.com analyst Fawad Razaqzada.
Despite an early decline, all three major Wall Street indices ended the day higher on Friday, concluding a positive week for the markets.
Adding to this positive sentiment, Adam Sarhan of 50 Park Investments highlighted, “We had very big moves over the past two weeks off the low,” and noted that “we are only five percent below the all-time high,” indicating sustained demand for stocks at lower prices.
At the start of the month, weak US jobs data and an interest rate hike in Japan contributed to stock market volatility. The Nikkei 225 in Asian trading climbed 3.6 percent as the yen depreciated against the dollar early in the day.
However, London’s market performance diverged from the positive European trend as a strengthening pound weighed down multinational companies earning in dollars.
On the corporate front, German chemicals giant Bayer experienced an 11.3 percent share price increase following a US court victory in their ongoing legal battle related to their glyphosate-based weedkillers.
– Oil Market: Challenges and Trends –
Meanwhile, oil prices slumped, with Brent crude oil from the North Sea closing down 1.7 percent at $79.68 per barrel. According to Commerzbank analyst Carsten Fritsch, the recent cooling off of the oil market is due to the delayed retaliatory strike by Iran and concerns about declining demand impacting the market.
Iran has threatened retaliation against Israel for the killing of Hamas political leader Ismail Haniyeh in Tehran. This threat, combined with new demand worries, has contributed to the downward pressure on oil prices.
– Key Figures and Market Closings –
In the markets, major indices closed at:
New York – Dow: UP 0.2 percent at 40,659.76 points
New York – S&P 500: UP 0.2 percent at 5,554.25
New York – Nasdaq Composite: UP 0.2 percent at 17,631.72
London – FTSE 100: DOWN 0.4 percent at 8,311.41
Paris – CAC 40: UP 0.4 percent at 7,449.70
Frankfurt – DAX: UP 0.8 percent at 18,322.40
EURO STOXX 50: UP 0.7 percent at 4,840.52
Tokyo – Nikkei 225: UP 3.6 percent at 38,062.67
Hong Kong – Hang Seng Index: UP 1.9 percent at 17,430.16
Shanghai – Composite: UP 0.1 percent at 2,879.43
Forex market rates showed:
Euro/dollar: UP at $1.1022 from $1.0972 on Thursday
Pound/dollar: UP at $1.2945 from $1.2853
Dollar/yen: DOWN at 147.60 yen from 149.06 yen
Euro/pound: DOWN at 85.14 pence from 85.36 pence
Oil prices:
West Texas Intermediate: DOWN 2.0 percent at $76.65 per barrel
Brent North Sea Crude: DOWN 1.7 percent at $79.68 per barrel
Additional Insight:
– The record high in gold prices reflects investor concerns about economic stability and geopolitical tensions, driving them to seek safe-haven assets.
– The fluctuating oil market highlights the impact of geopolitical events and demand trends on commodity prices.
– Market movements demonstrate the interplay between economic data, interest rate expectations, and currency valuations on global financial markets.
