Gold rose to an all-time high on Monday (September 15), boosted by a weaker dollar and falling U.S. Treasury yields, as investors prepared for this week's crucial Federal Reserve meeting that could set the tone for the rest of the year.

Spot gold rose 1.1% to $3,680.80 an ounce at 1:44 p.m. EDT (1744 GMT), after hitting a record high of $3,685.39 earlier in the session. Bullion prices rose about 1.6% last week.

U.S. gold futures for December delivery closed 0.8% higher at $3,719.00. The dollar index fell 0.3% to a one-week low, making gold more attractive to holders of other currencies, while the 10-year U.S. Treasury yield edged lower.

The market is almost certain the Fed will cut interest rates by 25 basis points on Wednesday, the first since December, with some still expecting a larger cut of 50 basis points, according to the CME FedWatch tool.

"Expectations for a 25 basis point rate cut are largely built in now," said Peter Grant, vice president and senior metals strategist at Zaner Metals, adding that there could be one or two more rate cuts before the end of the year.

Gold's next upside target is $3,700, followed by $3,730 and $3,743 in the short term, Grant said. Non-yielding bullion, often considered a safe haven asset during times of broader uncertainty, tends to perform well in low-interest-rate environments.

The Fed is meeting under unusual pressure, with leadership disputes and President Donald Trump pushing for greater influence over policy. The Senate has also cleared the way for Trump's economic adviser, Stephen Miran, to join the rate-setting committee, which could vote on Wednesday.

A weekend report suggesting China might relax gold import and export regulations prompted strong buying, with official and private demand seen as the main drivers of the bullion rally, said Tai Wong, an independent metals trader.

Data last week showed U.S. consumer prices rose at their fastest pace in seven months in August, while the latest employment data pointed to a weakening labor market, keeping the Fed on track to cut interest rates.

Elsewhere, spot silver rose 1.1% to $42.62 an ounce, platinum rose 0.7% to $1,400.77, and palladium fell 0.3% to $1,193.21. (alg)

Source: Reuters