Gold hovers near record high as Fed rate cut hopes rise

SINGAPORE: Gold prices held firm near an all-time peak on Monday, edging close to the symbolic $3,600 mark, as traders grew more confident that the US Federal Reserve may move towards a rate cut this month following weak labour market data.

Spot gold was trading flat at $3,586.81 per ounce in early Asian hours, after briefly touching a record $3,599.89 on Friday.

Fed signals boost bullion

Markets are now betting that the Fed could lower interest rates at its September meeting after last week’s softer-than-expected jobs report. US unemployment climbed to 4.3 percent in August, the highest in nearly four years, strengthening the case for monetary easing.

Kyle Rodda, a financial market analyst at Capital.com, said that all signs were currently favouring gold. “The main driver is the jobs data and the growing expectation that the Fed could cut by 50 basis points in September. While that remains a slim chance, it is a major shift from before the figures were released,” he noted.

Lower rates typically benefit bullion by reducing the opportunity cost of holding non-yielding assets and by pressuring the dollar, which makes gold cheaper for overseas investors.

Eyes on inflation data

Attention now turns to the US inflation report due on Thursday, which could play a decisive role in shaping the Fed’s next move. Traders have already priced in a 25-basis-point cut this month, while the odds of a larger 50-basis-point cut stand at about 8 percent, according to the CME FedWatch tool.

Strong year for gold

Gold has soared 37 percent so far in 2025, building on last year’s 27 percent rally. Analysts say the surge is fuelled by a weaker dollar, steady central bank purchases, and an uncertain global backdrop marked by geopolitical risks and economic slowdowns.

China’s central bank continued to expand its holdings in August, buying gold for a 10th straight month. Meanwhile, speculators raised their net long positions by more than 20,000 contracts in the week ending September 2, signalling strong investor appetite.

Other precious metals

Elsewhere in the market, silver slipped 0.5 percent to $40.75 an ounce. Platinum added 0.1 percent to $1,374.35, while palladium was steady at $1,109.71.

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