Gold prices trade above US$3,600 on Fed rate-cut bets

Investors are now awaiting US producer price data on Wednesday and consumer prices on Thursday for further clues on the Fed’s policy path

Gold prices hovered near a record high on Tuesday (Sep 9), holding firm above the US$3,600 level, as growing expectations for a US Federal Reserve interest rate cut this month lifted demand for the precious metal.

Spot gold was up 0.1 per cent at US$3,640.41 per ounce, as at 9.03 am. Bullion rose to a record high of US$3,646.29 on Monday.

US gold futures for December delivery edged 0.1 per cent higher to US$3,682.

US job growth weakened sharply in August and the unemployment rate increased to a nearly four-year high of 4.3 per cent, confirming that labour market conditions were softening and sealing the case for a Fed rate cut next week.

Traders are pricing in an 89.4 per cent chance of a 25-basis-point rate cut at the Fed’s September meeting and a 10.6 per cent probability of a jumbo 50-basis-point rate cut, according to the CME Group’s FedWatch tool.

Lower US interest rates put pressure on the US dollar and bond yields, increasing the appeal of non-yielding bullion.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

The US dollar index fell to an almost seven-week low against its rivals, making gold more attractive for other currency holders, while the benchmark US 10-year yield dropped to a five-month low.

Meanwhile, the European Central Bank is widely expected to hold rates at its policy meeting on Thursday.

Investors are now awaiting US producer price data on Wednesday and consumer prices on Thursday for further clues on the Fed’s policy path.

SEE ALSO

Gold prices have gained 38 per cent so far this year, following a 27 per cent jump in 2024, bolstered by soft US dollar, strong central bank accumulation, dovish monetary settings and heightened global uncertainty.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said that its holdings fell 0.23 per cent to 979.68 tonnes on Monday from 981.97 tonnes on Friday.

Elsewhere, spot silver was flat at US$41.31 per ounce. Platinum gained 0.3 per cent to US$1,387.20 and palladium climbed 0.8 per cent to US$1,142.64. REUTERS