WASHINGTON (dpa-AFX) - Gold prices surged to record highs on Friday while the dollar held near a nine-month low versus the yen amid speculation about an outsized rate cut at next week's Federal Reserve policy meeting.
Spot gold rose half a percent to $2,571.27 per ounce while U.S. gold futures were up 0.7 percent at $2,598.60.
Bullion extended Thursday's bullish breakout after the latest data showed U.S. producers saw mixed price pressures last month.
While the headline PPI showed a deeper-than-expected slowdown, core PPI remained sticky, sending mixed signals about the state of the world's largest economy.
The FOMC meeting on September 17-18 is crucial for financial markets, with expectations leaning toward a 25-bps rate cut followed by a series of interest rate cuts before the end of the year.
CME Group's FedWatch Tool currently suggests rates will be lower by at least a full percentage point following the Fed's December meeting.
The U.S. economic calendar remains light, with data on import and export prices along with a report on consumer sentiment likely to garner investor attention ahead of next week's Fed meeting.
The consumer survey report includes readings on inflation expectations.
Goldman Sachs Research said the price of gold will reach $2,700 by early next year, buoyed by interest rate cuts by the Federal Reserve and gold purchases by emerging market central banks.
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