Gold sets new peak as traders bet on Fed rate cut

SINGAPORE: Gold prices touched another record high on Tuesday, supported by a weaker dollar and falling bond yields as investors grew confident that the US Federal Reserve will begin cutting interest rates this month.

Spot gold rose 0.4 percent to $3,651.38 per ounce in early Asian trading, while US gold futures for December delivery also gained 0.4 percent, reaching $3,690.90.

Market watchers believe the rally still has room to run. “We probably will see more upside in gold from here provided that the US central bank delivers with regards to market expectations of seeing multiple rate cuts,” said Tim Waterer, chief market analyst at KCM Trade.

Fed outlook lifts bullion

US economic data has strengthened the case for easier policy. Job growth slowed sharply in August, while unemployment jumped to 4.3 percent, its highest in nearly four years, underscoring signs of a cooling labour market.

Traders are now pricing in an 89.4 percent chance of a 25-basis-point rate cut at this month’s Fed meeting, with a smaller 10.6 percent probability for a larger half-point move, according to the CME FedWatch tool.

Lower interest rates typically weigh on the dollar and Treasury yields, boosting the appeal of non-yielding assets like gold. On Tuesday, the dollar index slipped to its weakest level in almost seven weeks, while the benchmark 10-year Treasury yield touched a five-month low.

Investors are now awaiting key US inflation readings, with producer price data due Wednesday and consumer prices on Thursday, for further signals on the Fed’s path. Waterer noted that a softer inflation print could push the central bank into a more dovish stance and potentially accelerate gold’s climb towards the $3,700 mark.

So far this year, gold has gained 38 percent, building on a 27 percent rise in 2024, as demand has been lifted by a weaker dollar, strong central bank purchases, low interest rates and persistent global uncertainty.

Other precious metals also saw gains. Spot silver inched up 0.1 percent to $41.36 per ounce, platinum advanced 1 percent to $1,396.42, and palladium climbed 1.4 percent to $1,149.47.

Pakistan market mirrors global trend

In Pakistan, gold prices jumped sharply on Monday, in line with the surge in global bullion.

According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of 24-karat gold rose by Rs6,100 per tola, reaching Rs384,000.

The rate for 10 grammes climbed by Rs5,230 to Rs329,219. Meanwhile, 22-karat gold was quoted higher at Rs301,794 per 10 grammes.

With international prices still edging higher, jewellers and traders expect domestic rates to remain under upward pressure in the days ahead.

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