Gold Nears Record Highs as U.S. Rate Cut Bets Intensify
Gold prices hovered close to record territory on Monday, supported by mounting expectations that the U.S. Federal Reserve will cut interest rates this month, following weaker-than-expected labor market data.
Spot gold was steady at $3,586.81 per ounce , while U.S. gold futures for December delivery slipped 0.7% to $3,626.10, according to Reuters.
Analysts noted that the key driver behind the rally is the deterioration in U.S. labor market conditions. In August, the unemployment rate rose to 4.3%, its highest level in nearly four years, while job growth slowed sharply. This has strengthened the case for monetary easing, with markets pricing in at least a 25-basis-point rate cut at the Fed’s September 17 policy meeting, and an 8% probability of a larger 50-basis-point cut, according to CME’s FedWatch tool.
Traditionally viewed as a safe-haven asset, gold tends to benefit from lower interest rates, which reduce the opportunity cost of holding the non-yielding metal. Rate cuts also weigh on the U.S. dollar, making gold more attractive to investors holding other currencies.
Other precious metals also eased slightly: silver fell 0.3% to $40.84 per ounce, platinum dipped 0.1% to $1,371.65, and palladium slipped 0.2% to $1,107.70.
With financial markets focused on the Fed’s upcoming decision, gold remains in the spotlight as the clear winner in a potential easing cycle, with record-breaking levels seemingly within reach.
