Gold surged past $3,700 an ounce for the first time on Tuesday (September 16th) as rising bets on a Federal Reserve rate cut this week fueled a rally fueled by safe-haven demand, central bank buying, and a weaker dollar.
Spot gold rose 0.2% to $3,687.67 an ounce after hitting a record high of $3,702.95 earlier in the session. U.S. gold futures for December delivery rose 0.1% to $3,724.
"Global growth uncertainty and geopolitical risks continue to keep safe-haven demand high, but gold's rally is largely driven by anticipation of aggressive interest rate cuts from the Federal Reserve," said Zain Vawda, analyst at MarketPulse by OANDA.
Traders expect a 25 basis point rate cut at the conclusion of the two-day meeting on September 17, with a small chance of a 50 basis point cut, according to the CME FedWatch tool. US President Donald Trump urged Fed Chairman Powell in a social media post on Monday to implement a "bigger" rate cut.
Non-yielding gold bullion tends to perform well in a low interest rate environment.
The dollar fell to its lowest level in more than two months against a basket of major currencies. A weaker greenback makes gold cheaper for holders of other currencies.
"Gold surged on the back of a sharply weaker dollar, which is at a low level not seen since July," said Tai Wong, an independent metals trader.
"However, caution may prevail ahead of tomorrow's key Fed decision, so some profit-taking should not be surprising."
Gold bullion, known as a hedge against uncertainty, has surged about 41% since the start of the year. Gold prices broke through $3,600 an ounce on September 8.
Analysts say the rally is being driven by a potent combination of sustained central bank buying, rising safe-haven inflows, and a global shift away from the US dollar, which is also facing persistent weakness. Spot gold surged 27% in 2024 and broke through the $3,000 mark for the first time in March, as uncertainty over Trump's trade policies drove investors to the safe-haven asset.
Elsewhere, spot silver fell 0.6% to $42.44 an ounce, after hitting its highest level since September 2011 earlier in the session.
Platinum fell 0.8% to $1,389.50, and palladium weakened 0.6% to $1,176.97. (alg)
Source: CNBC
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