Gold hit a more than four-month high on Monday (September 1) as speculation of a US Federal Reserve interest rate cut this month and a weaker dollar boosted bullion's appeal, while silver broke through $40 an ounce for the first time since 2011.

Spot gold rose 0.9% to $3,477.89 an ounce at 08:47 GMT, reaching its highest level since April 22. US gold futures for December delivery rose 0.9% to $3,548.0. Spot silver jumped 2.7% to $40.72 an ounce, its highest since September 2011.

The US dollar traded near its lowest level since July 28 against a basket of major currencies, making dollar-priced bullion cheaper for overseas buyers. "Gold, and especially silver, continued its strong rally on Friday, supported by stagnant US inflation, weakening consumer sentiment, (expected) interest rate cuts... and concerns over the Fed's independence," said Ole Hansen, head of commodity strategy at Saxo Bank.

The US personal consumption expenditures price index rose 0.2% month-on-month and 2.6% year-on-year, in line with expectations, data showed on Friday. "Silver moved higher in response to expectations of lower interest rates, while a tight supply market helped maintain an upward bias," said Tim Waterer, chief market analyst at KCM Trade.

In a social media post last week, San Francisco Federal Reserve Bank President Mary Daly reiterated her support for interest rate cuts, citing labor market risks. "The market is monitoring Friday's US labor market report, anticipating that this will allow the Fed to continue cutting interest rates from September onwards (given) that it supports investment demand," said UBS analyst Giovanni Staunovo.

August's non-farm payrolls data, due Friday, is expected to add 78,000 jobs, according to a Reuters poll, compared with 73,000 in July.

Non-yielding gold typically performs well in a low-interest rate environment.

Meanwhile, U.S. Trade Representative Jamieson Greer said on Sunday that President Donald Trump's administration is continuing negotiations with trading partners despite a U.S. court ruling that most of the tariffs are illegal.

Elsewhere, platinum rose 2.2% to $1,393.95 and palladium gained 0.4% to $1,113.06. (alg)

Source: Reuters