Gold prices surged after the September PPI report.

Gold prices are regaining significant upward momentum, surpassing the $4,100/ounce mark as investors increase their bets on the possibility of the Fed cutting interest rates next month. This growing expectation helps gold maintain its safe-haven status amid the volatile US economy.

The U.S. Department of Labor reported that the Producer Price Index (PPI) rose 0.3% in September, following a 0.1% decline in August. This increase was in line with expectations and suggests that inflationary pressures are not too strong. Over the past 12 months, the PPI increased 2.7%, matching analysts' forecasts.

The core PPI, excluding food and energy, rose only 0.1% in September. This was lower than the market's forecast of 0.2%, and the year-on-year increase was only 2.6%. Lower-than-expected inflation provided further impetus for the Fed to ease policy, thereby supporting gold prices to maintain their highs.

Despite the delayed release of the PPI report due to the 43-day US government shutdown, market reaction showed that gold prices accelerated immediately after the information emerged. Some experts view this data as unlikely to be directional, but the overall trend still favors the precious metal during a period of declining interest rates.

According to Naeem Aslam from Zaye Capital Markets, the US dollar is under pressure as expectations of interest rate cuts spread. He believes gold is clearly benefiting: if it holds above $4,150 per ounce, the precious metal could quickly advance to $4,200 per ounce. Safe-haven sentiment and low yields are providing significant impetus for gold prices.

The CME FedWatch tool indicates an 84% probability that the Fed will cut interest rates next month. However, economists remain more cautious, assessing that this decision could have two possible outcomes. This difference in expectations will create further volatility for gold prices in the coming sessions.