Gold prices rose in European trading on Thursday, extending their gains for the fifth consecutive session and hitting a new all-time high, continuing to break records as they approached the 4,300-dollar-per-ounce level for the first time in history.

The rally came amid strong safe-haven demand for the metal and was supported by a weaker US dollar against a basket of global currencies, as markets priced in strong expectations that the Federal Reserve will cut interest rates in both October and December.

Price Overview

• Gold prices rose by 0.8% to 4,242.13 dollars per ounce — the highest on record — from an opening level of 4,207.63 dollars, after touching a session low of 4,199.67 dollars.

• At Wednesday’s close, gold gained 1.6%, marking its fourth consecutive daily advance and setting another record high amid continued safe-haven buying.

US Dollar

The US Dollar Index fell by 0.25% on Thursday, extending losses for the third straight session and hitting a nearly two-week low of 98.42 points, reflecting a continued decline in the American currency against both major and minor counterparts.

As is well known, a weaker dollar makes dollar-denominated gold more attractive to investors holding other currencies.

The dollar’s decline was driven by recent comments from the Federal Reserve chairman, as well as renewed trade tensions between the United States and China.

US officials on Wednesday criticized China’s significant expansion of export controls on rare earth metals, calling it a threat to global supply chains.

A Treasury Department official warned that the ongoing federal government shutdown, now in its second week, could cost the US economy up to 15 billion dollars per week in lost output.

US Interest Rates

• Jerome Powell said on Tuesday that the labor market remains stagnant, with both hiring and layoffs at low levels, and that the lack of official economic data due to the government shutdown has not prevented policymakers from assessing the economic outlook — at least for now.

• Philadelphia Fed President Anna Paulson stated that rising risks in the labor market strengthen the case for further US interest rate cuts.

• According to CME Group’s FedWatch Tool, markets currently price in a 96% probability of a 25-basis-point rate cut at the October meeting, with only a 4% chance of rates remaining unchanged.

• To reassess these probabilities, investors are closely monitoring comments from Federal Reserve officials, as the release of economic data remains delayed due to the government shutdown.

Gold Outlook

Nitesh Shah, Head of Commodities Strategy at WisdomTree Investments, said that renewed trade frictions are intensifying uncertainty across global supply chains — prompting investors to increasingly turn to gold.

Shah added that the rise in gold prices also reflects investor concerns about the credibility of US policy, noting that “there is a strong likelihood the metal will remain above the 4,200-dollar level.”

SPDR Fund

Gold holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 1.15 metric tons on Wednesday, marking the fourth consecutive daily increase and bringing total holdings to 1,022.60 metric tons — the highest since July 8, 2022.

The British pound rose in European trading on Thursday against a basket of global currencies, extending its gains for the second consecutive session against the US dollar and reaching its highest level in a week, supported by the continued decline of the American currency in the foreign exchange market.

Following strong UK wage data, doubts increased over the likelihood of the Bank of England cutting interest rates in November. To reassess these expectations, investors are now awaiting the release of the latest British GDP figures later today.

Price Overview

• The GBP/USD exchange rate rose by 0.3% to 1.3442 dollars — the highest since October 7 — from an opening level of 1.3401 dollars, after touching a low of 1.3392 dollars.

• The pound gained 0.6% against the dollar on Wednesday, marking its first daily increase in three sessions, supported by weakness in the US currency.

US Dollar

The US Dollar Index fell by 0.25% on Thursday, extending its losses for the third consecutive session and reaching a near two-week low of 98.42 points, reflecting continued declines in the greenback against both major and minor currencies.

The decline came as investors assessed the latest trade tensions between the United States and China, which, if they escalate, could spark a new trade war between the world’s two largest economies.

Senior US officials — including Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer — criticized China’s expanded controls on rare earth exports, calling them a threat to global supply chains.

China’s Ministry of Commerce defended its export restrictions, pointing to US measures against Chinese goods and companies, and described Washington’s criticism as hypocritical.

UK Interest Rates

• Data released earlier this week showed that average wages in the United Kingdom rose in August at the fastest pace in three months, adding inflationary pressure on the Bank of England’s monetary policymakers.

• Market pricing currently reflects around a 50% probability of a 25-basis-point rate cut by the Bank of England in November.

UK Economic Growth

To reassess those expectations, investors are awaiting key data from London later today on the UK’s GDP growth for August, along with additional figures on manufacturing output.

Pound Outlook

At Economies.com, we expect that if the upcoming data are stronger than market forecasts, the likelihood of a November rate cut will decline — leading to further gains in the British pound.

The Australian dollar fell in European trading on Thursday against a basket of global currencies, resuming the losses that had briefly paused against its US counterpart, heading back toward its two-month low as selling pressure returned following gloomy labor market data from Australia.

Data showed that the unemployment rate unexpectedly rose in September to its highest level in nearly four years, marking the latest sign of an economic slowdown and strengthening expectations for an Australian interest rate cut in November.

Price Overview

• The AUD/USD exchange rate fell by 0.5% to 0.6480, down from the opening level of 0.6512, after touching a session high of 0.6516.

• The Australian dollar had closed Wednesday’s session up by 0.4% against the US dollar, as part of a recovery from the two-month low of 0.6440 recorded the previous day.

Weak Data

Figures released by the Australian Bureau of Statistics on Thursday showed that net employment rose by 14,900 jobs in September, compared with a revised decline of 11,900 in August. The increase fell short of market expectations for a gain of 20,500 jobs.

The data also showed that the unemployment rate rose to 4.5% in September — the highest since November 2021 — exceeding market forecasts of 4.3%. The August figure was revised upward to 4.3% from the previous 4.2%.

Australian Interest Rates

• Following the release of the data, market pricing for a 25-basis-point rate cut by the Reserve Bank of Australia (RBA) in November rose from 40% to 72%.

• The RBA kept interest rates unchanged at 3.60% in September, after three cuts earlier this year, as it awaits more inflation data before making further policy decisions.

Opinions and Analysis

Harry Murphy Cruise, head of economic research at Oxford Economics Australia, said: “The Reserve Bank of Australia finds itself between a rock and a hard place. Inflation appears set to rise above the RBA’s latest forecasts, while the labor market is weaker than expected. We still believe a rate cut in November is justified.”

Tony Sycamore, analyst at IG, said: “The Reserve Bank of Australia had expected some cooling in the labor market. However, its latest projections did not anticipate the unemployment rate rising to around 4.5% — not this year, not next year, nor in 2027.” Sycamore added, “The RBA now finds itself in a very difficult position.”

The world is witnessing an unprecedented surge in energy demand driven by the rapid spread of artificial intelligence technologies, putting immense pressure on power sources and grid infrastructure worldwide.

With expectations for continued growth in this sector, public and private investors are racing to accelerate the large-scale development of new data centers. According to data from the International Energy Agency (IEA), global investment in data centers reached half a trillion dollars in 2024 — nearly doubling in just two years.

However, this rapid pace of construction has created a new problem: data center buildouts are outstripping the capacity of electrical grids to expand, leading to critical delays in bringing new facilities online.

The Power Grid Struggles to Keep Up

The IEA’s *Energy and AI* report, published earlier this year, notes that one in every five data center projects worldwide is at risk of delay due to intense pressure on power grids.

The report stated: “The interconnection queues for new projects — both generation and load, including data centers — are long and complex,” adding that building new transmission lines can take four to eight years in advanced economies, while wait times for essential grid components such as transformers and cables have doubled over the past three years.

In the United States, power grids were already aging and overburdened even before the AI-driven boom. With the surge in demand from data center construction, the scale of required upgrades has become enormous.

The US Department of Energy estimates that the country will need about 47,300 gigawatt-miles of new transmission lines by 2035 — a 57% increase in current grid capacity. To meet this target, the current construction pace would need to double.

Data Centers Clustered in Already Stressed Regions

Compounding the problem is the fact that many new data center projects are being built in areas already home to existing facilities — regions where electrical grids are already strained.

In the US, for example, half of all data centers currently under construction are expansions of existing clusters. To ease grid pressure, improve efficiency, and avoid local bottlenecks, it would be far more effective to build new facilities in regions with surplus electrical capacity.

Distributed Energy: A Promising Solution to Ease the Strain

This is where the concept of distributed energy resources (DERs) comes into play.

DERs include small-scale power generation systems such as rooftop solar panels and battery storage units. Unlike traditional grids that transport power over long distances from generation plants to end users, distributed energy systems generate and consume electricity locally.

Building more of these decentralized energy hubs and integrating them with public utilities could serve as a crucial short-term solution to accelerate the deployment of new data centers. They could also help balance loads on local grids during peak hours by providing supplemental energy when needed.

According to a report by *Utility Dive*: “If implemented correctly, this solution could quickly increase computing capacity using existing distribution equipment, transmission lines, and power plants,” adding that it could also reduce energy bills for residents and local businesses.

Balancing Technology and Consumers

Reducing energy costs is critical at a time when energy poverty is rising in both the United States and globally.

In the current model, consumers bear much of the financial burden of integrating AI infrastructure on a large scale — even if they do not benefit from it directly.

However, adopting distributed energy systems could change this equation, as it may encourage technology companies to pay more in exchange for faster and more direct grid connections.

As *Utility Dive* notes: “The more that’s paid, the greater the incentive for owners of distributed resources, and the faster new capacity can be integrated into grids — meaning more money in consumers’ pockets.”

Acceleration in Distributed Energy Development

The development of distributed energy systems is already growing rapidly, as both tech giants and grid operators increasingly recognize their value.

According to research firm Wood Mackenzie, hundreds of gigawatts of distributed energy resources are expected to be added to power grids by 2027 — roughly matching the projected additions from centralized power plants over the same period.