Gold prices increased on Friday, staying near the record highs reached earlier this week. This rise came as indications of a weakening U.S. labor market strengthened expectations that the Federal Reserve will implement its first rate cut of the year next week. Spot gold increased by 0.4% to $3,649.54 per ounce at 09:19 a.m., staying near Tuesday’s record high of $3,673.95. The metal has increased by 1.8% this week and is on track for its fourth straight weekly gain.

Gold futures in the U.S. for December delivery increased by 0.4%, reaching $3,688.10. “Weaker jobs and uneven inflation… the expectation that the Fed will lower rates is driving up metal prices due to concerns about long-term inflation,” said Daniel Pavilonis. Recent data shows that jobless claims rose sharply last week, while consumer prices experienced their biggest monthly jump in seven months in August. This has influenced changes in expectations regarding interest rates. Investors are focusing more on signs of weakness in the labor market rather than persistent inflation when it comes to setting expectations for interest rates.

Fed fund futures are fully anticipating a 25-basis-point cut at the Fed’s meeting on September 17, but the likelihood of a bigger 50-basis-point cut has decreased. “Considering these favorable conditions and the recent increase in exchange-traded fund flows, we expect gold to reach $3,900 per ounce by the middle of next year,” stated by analyst. The price of gold has increased by 39% this year. It is often considered to do well when interest rates are low, as investors view it as a way to protect against inflation and general uncertainty.

On Friday, China’s central bank asked for public input on its plans to make gold import and export rules easier by simplifying licensing. In other markets, spot silver increased by 1.3% to $42.08 per ounce, reaching a 14-year high. Platinum rose by 1.4% to $1,397.61, while palladium saw a gain of 2.2%, reaching $1,214.70. All three metals were on track for weekly increases.