Gold is soaring high, where is the next challenge?

On Thursday, investors' focus was on the number of initial jobless claims and the Producer Price Index (PPI) in the United States.

The inflation data was mixed, while the job market cooled down a bit, but there was still no sign of large-scale layoffs.

The number of initial jobless claims in the United States for the week ending September 7 was recorded at 230,000, slightly higher than the previous value of 227,000, in line with expectations.

The U.S. August PPI annual rate was recorded at 1.7%, lower than the expected 1.8%, and the previous value was revised down from 2.2% to 2.1%; the monthly rate was recorded at 0.2%, exceeding the expected 0.1%, and the previous value was revised down from 0.1% to 0%.

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After the data was released, swap traders solidified their bets on the Federal Reserve cutting interest rates by 25 basis points at the meeting next week.

Spot gold continued to rise, once again setting a new historical high of $2,550 per ounce, nearly $40 higher than the daily low.

Spot silver stood at $29 per ounce, with a daily increase of 2%.

The US dollar index gave up all its daily gains.

It is worth noting that the data survey period last week included the U.S. Labor Day holiday.

The number of jobless claims tends to fluctuate around public holidays.

However, since falling from the 11-month high of 250,000 people in late July, this indicator has remained low.

In addition, the number of continued jobless claims in the United States for the week ending August 31 was 1.85 million, a slight increase of 5,000 people.

The number of continued jobless claims has also mostly declined after soaring to the highest level since the end of 2021 in July, consistent with the decline in the unemployment rate last month.

However, the low level of layoffs indicates that despite a significant decrease in job vacancies and new hires, the U.S. labor market remains healthy.

Companies still have enough demand to maintain the current level of staffing, indicating that the economy continues to expand.

In addition to U.S. economic data, earlier, the European Central Bank cut interest rates for the second time this year and lowered its economic growth forecast.

This move led traders to reduce their expectations for the European Central Bank's interest rates, predicting another 36 basis points cut before the end of the year.

As a result, the euro rose against the dollar, depressing the index that measures the dollar against a basket of currencies.

Ole Hansen, head of commodity strategy at Saxo Bank, said, "The combination of the European Central Bank's rate cut, a slight rebound in the number of people applying for unemployment benefits, and the PPI data is enough to push gold prices to a historical high."

Hansen added that for the gold market, regardless of the extent of the rate cut, "the start of the rate-cutting cycle could add support to its prices."

Lower interest rates are generally favorable for non-interest-bearing assets like gold and silver.

Gold prices have risen by more than a fifth this year, with recent strength supported by market expectations that the Federal Reserve will soon start a rate-cutting cycle.

Central bank purchases and strong demand in the over-the-counter market have also helped the rebound of this precious metal.

Fxstreet analysts said that if gold bulls continue to break through the historical high of $2,532, the psychological level of $2,550 above that level will become resistance.

However, if gold prices face resistance again near the $2,530 range, a correction will follow, and a daily close below the 21-day moving average of $2,503 will negate the bullish outlook in the short term.