Gold Hits Record as Rate-Cut Bets Surge

Highlights:

• Gold hits a record high of US$3,647 an ounce, driven by growing bets on multiple US Federal Reserve rate cuts.
• Rate-cut speculation and weak US payrolls have boosted safe-haven demand, supporting a nearly 40% gain for gold this year.
• Market focus ahead: upcoming US jobs revisions, inflation data, and Treasury auctions could influence gold’s short-term trajectory.

Bullion Rallies to All-Time High

Gold prices surged to a fresh all-time high on Tuesday, driven by growing expectations of Federal Reserve rate cuts. The precious metal climbed as much as US$3,647 an ounce, surpassing Monday’s previous record. At the time of writing, gold remained near these elevated levels, continuing its strong rally.

Rate-Cut Speculation Fuels Gains

Traders have been pricing in at least three Fed rate reductions this year, including a potential quarter-point cut at the upcoming meeting. The rally accelerated after unexpectedly weak US payroll data last Friday, which intensified bets on looser monetary policy. Lower borrowing costs typically support gold, which does not yield interest, making it more attractive compared with fixed-income assets.

Economic Data and Market Watch

Gold’s near-term trajectory could depend on several key indicators, including the benchmark revision of US jobs data due later Tuesday, and the tone of upcoming producer and consumer inflation figures on Wednesday and Thursday. Additionally, investor reaction to auctions of short- and long-term US Treasuries will be closely monitored, as shifts in yields can influence gold demand.

Geopolitical Tensions and Long-Term Outlook

The yellow metal has surged nearly 40% this year, boosted by central bank purchases, rate-cut speculation, and safe-haven demand amid geopolitical concerns and uncertainty over US trade policies. President Donald Trump’s repeated criticisms of the Fed’s independence have further supported gold’s multi-year rally. Analysts remain bullish on gold. Goldman Sachs recently projected that prices could approach US$5,000 an ounce if investors divert even a small portion of holdings from Treasuries into bullion amid signs of political interference in the US central bank.

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