FX.co ★ Gold Nears Record High on Softer US Inflation Signals and Rising Geopolitical Tensions

Gold prices surged to nearly $3,650 per ounce on Wednesday, approaching record levels, following an unexpected decrease in US producer prices, which has strengthened the expectation that the Federal Reserve will resume interest rate cuts at its meeting next week. Both the headline and core Producer Price Index (PPI) showed a 0.1% decline in August, opposing predictions of a 0.3% increase. This drop was largely attributed to a significant decrease in machinery and vehicle wholesale margins. These figures follow earlier reports of a fragile labor market, prompting markets to anticipate multiple rate cuts by the Fed this year. Investors are now turning their attention to Thursday's consumer price inflation report for further insights. Additionally, geopolitical tensions are bolstering the demand for safe-haven assets. US President Donald Trump has called on the EU to impose tariffs as high as 100% on China and India to pressure Russia regarding the conflict in Ukraine. Meanwhile, unrest in the Middle East has intensified, and Poland has reported shooting down Russian drones that intruded into its airspace during a significant assault in western Ukraine.