Gold hit a new record high on Tuesday (September 9), holding well above the $3,600 level reached in the previous session, as rising bets on a US interest rate cut weakened the dollar and pushed bond yields down, boosting demand for the precious metal.

Spot gold rose 0.4% to $3,654.09 an ounce at 09:31 GMT, after hitting a record high of $3,659.10 earlier in the session. US gold futures for December delivery rose 0.4% to $3,693.

Gold prices have risen nearly 39% this year, after surging 27% in 2024, driven by a weaker dollar, strong central bank accumulation, dovish monetary policy, and rising global uncertainty.

The dollar index fell to a nearly seven-week low against a basket of major currencies, making gold more attractive to holders of other currencies, while the benchmark 10-year US Treasury yield held near a five-month low. "Investors are optimistic about market confidence in interest rate cuts, which is pushing gold to a new record high. A weaker dollar also helped pave the way for $3,600, while bullion-backed inflows and central bank buying add to the strength of the combination," said Han Tan, chief market analyst at Nemo.money.

Traders are pricing in an 88% chance of a 25 basis point Federal Reserve rate cut next week and a 12% chance of a 50 basis point cut, according to the CME Group's FedWatch tool. This comes after Friday's data showed US job growth weakened sharply in August.

Lower interest rates pressured the dollar and bond yields, increasing the appeal of non-yielding bullion. Investors now await US producer price data on Wednesday and consumer price data on Thursday for clues on further rate cuts. "We may see spot gold approach $3,700 this week if the market sees a significantly lower revision to US employment data and a very low CPI figure," Tan said.

"A $4,000 gold price by 2025 would likely require a faster-than-expected Fed rate cut, as the Fed's independence or confidence in US fiscal policy deteriorates," Tan added. Elsewhere, spot silver weakened 0.3% to $41.22 per ounce. Platinum rose 0.5% to $1,389.00, and palladium rose 0.2% to $1,136.78. (alg)

Source: Reuters