Onome Amuge
Gold soared to a fresh all-time high on Monday, extending a two-day rally as mounting expectations of a Federal Reserve rate cut drove investors into safe-haven assets and deepened pressure on the US dollar.
Spot prices for the precious metal climbed as much as 1.2 per cent to $3,646 a troy ounce in intraday trading before easing back to $3,634. Bullion has risen nearly 38 per cent since the start of the year, powered by steady central bank demand, dollar weakness and falling Treasury yields.
The latest leg higher followed a string of soft US labour market data that reinforced expectations the Fed will begin lowering borrowing costs as soon as its September meeting. Non-farm payrolls showed just 22,000 jobs added in August, while unemployment ticked up to 4.3 per cent from 4.2 per cent. Markets are now fully pricing in a quarter-point cut, with some traders betting on a more aggressive 50-basis point reduction.
“Gold is behaving as the mirror image of US labour market softness. The weaker the jobs print, the stronger the conviction that the Fed will have to move,” said Ole Hansen, head of commodity strategy at Saxo Bank.
US Treasury yields fell in tandem with the dollar. The benchmark 10-year note slipped more than three basis points to 4.049 per cent, while real yields, stripping out inflation expectations, eased to 1.68 per cent. The dollar index, which tracks the greenback against a basket of peers, lost 0.21 per cent to 97.50, bolstering the appeal of non-yielding assets like gold.
Investors are now focused on a busy week for US inflation releases, with producer price data due Wednesday and consumer price inflation on Thursday. Headline CPI is forecast to rise to 2.9 per cent year on year from 2.7 per cent, while core inflation is expected to hold steady at 3.1 per cent. Any downside surprises would strengthen the case for easier policy, analysts said, while firmer readings could spark a reversal in gold’s momentum.
The rally has also been underpinned by robust physical demand, particularly from Asia. Figures released on Monday showed the People’s Bank of China extended its gold-buying streak for a tenth straight month in August, part of a broader effort by emerging market central banks to diversify reserves away from the dollar.
“Central bank accumulation remains a key structural driver. That, combined with speculative positioning around Fed policy, makes gold a two-way bet — both tactical and strategic,” said Carsten Menke, head of research at Julius Baer.
Technical analysts note that momentum indicators remain supportive of further upside, despite gold entering overbought territory. The relative strength index, a widely watched gauge, is nearing but has not breached extreme levels above 80. Clearing the $3,650 threshold could set up a run towards $3,700 and beyond, traders said, while immediate support lies at $3,578.
The strength of bullion’s gains has revived debate over how far the Fed will go in its easing cycle. “The talk of a 50-basis point cut is not mainstream yet, but it’s a risk investors cannot ignore,” said Frederic Lasserre, head of research at trading house Gunvor.
Goldman Sachs reiterated its medium-term forecasts over the weekend, projecting an average Brent crude price of $56 a barrel in 2026 alongside WTI at $52, but flagged a slightly larger oil surplus in the Americas. For gold, the bank maintained its constructive outlook, citing “asymmetric upside risks” if monetary easing accelerates.
