Gold prices soar past $3,600 to hit new record high
What's the story
Gold prices have hit a new record high, crossing the $3,600 mark on Monday. The surge comes after weak job data from the United States, which has fueled expectations of an interest rate cut by the US Federal Reserve. Spot gold rose 0.7% to $3,612.2 per ounce earlier today and even touched a new peak of $3,616.64 during trading hours.
Market trends
Gold futures remain stable at $3,653
The yellow metal has gained a whopping 37% this year, adding to a 27% gain in 2024. The rally is fueled by a weaker dollar, aggressive central bank buying, and geopolitical and economic uncertainty. US gold futures for December delivery remained stable at $3,653.1 amid these developments.
Economic indicators
US job growth takes a hit
US job growth took a sharp hit in August, with the unemployment rate rising to a nearly four-year high of 4.3%. The data confirms that labor market conditions are softening and strengthens the case for a Fed rate cut next week. Carlo Alberto De Casa, an external analyst at Swissquote, said these rate cut bets are driving gold demand amid an uncertain geopolitical scenario.
Market expectations
Traders expect rate cut to boost gold prices further
Traders are expecting a 90% chance of a 25-basis-point cut this month. Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies. UBS analyst Giovanni Staunovo expects gold to rise to $3,700/ounce by mid-next year amid these market conditions. The focus now shifts to the upcoming US inflation report due on Thursday, which could provide more clarity on the Fed's expected rate cut size.