Gold climbs to more than four-month high on US rate-cut bets

Gold prices rose to a more than four-month high on Monday (Sep 1), as increased expectations of a US Federal Reserve interest rate cut this month lifted bullion’s allure.

Spot gold was up 0.3 per cent at US$3,457.16 per ounce, as at 10.00 am, hitting its highest point since Apr 23.

US gold futures for December delivery gained 0.3 per cent to US$3,525.70.

US consumer spending increased solidly in July while underlying inflation picked up as tariffs on imports raised prices of some goods, but that data will probably not prevent the Fed from cutting interest rates this month.

On Friday, data showed that the US Personal Consumption Expenditures Price index rose 0.2 per cent month on month, and was up 2.6 per cent on a year on year basis, both in line with expectations.

Traders are currently pricing in an 87 per cent chance the Fed will ease rates by 25 basis points later this month, according to the CME FedWatch tool.

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Non-yielding gold typically performs well in a low-interest-rate environment.

On the trade front, US Trade Representative Jamieson Greer said on Sunday that the Trump administration is continuing its talks with trading partners despite a US appeals court ruling that most of US President Donald Trump’s tariffs are illegal.

Asian shares started the new month in the red on Monday after a court ruling threw another wrench into US tariff policy.

Focus now shifts to US non-farm payrolls data, due on Friday, that could determine the size of the Fed’s expected rate cut later this month.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said that its holdings rose 1.01 per cent to 977.68 tonnes on Friday from 967.94 tonnes on Thursday.

Elsewhere, spot silver rose 1.1 per cent to US$40.11 per ounce, platinum gained 0.8 per cent to US$1,374.95 and palladium climbed 0.4 per cent to US$1,114. REUTERS