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- Gold gained support from a weaker U.S. Dollar and rising expectations of Federal Reserve rate cuts.
- Investors also turned to bullion as safe-haven demand grew amid U.S. government shutdown concerns.
Gold price hit a new record high on September 29, rising above $3,800 per ounce. The move came as the U.S. dollar eased and traders increased their bets that the Federal Reserve will lower interest rates again later this year. Spot gold price was up 1.4% at $3,812.49 an ounce by 0727 GMT while U.S. gold futures for December gained 0.9% to $3,842.20.
Gold Jumps as Dollar Slides Amid Rate-Cut Expectations
The dollar index slipped 0.2% against its major peers, making bullion cheaper for buyers using other currencies. As stated in our recent coverage, the softer greenback gave support to the gold price, adding to demand from investors looking for safer assets.
Market focus also turned to U.S. inflation data released on Friday. The Commerce Department reported that the Personal Consumption Expenditures (PCE) Price Index rose 0.3% in August, slightly higher than July’s 0.2% increase. The number matched economist expectations and reinforced the view that inflation is under control.
Market participants see this as giving the Federal Reserve room to ease monetary policy. According to the CME FedWatch Tool, markets are pricing in a 90% chance of a rate cut in October and a 65% chance of another cut in December. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making the metal more attractive.
Analysts caution that the market is already heavily positioned for gains, but sentiment remains positive, with investors eyeing the possibility of fresh highs in the near term. Alongside this development, as we detailed in our last news piece, Deutsche Bank noted Bitcoin and Gold could both appear on central bank balance sheets by 2030.
Safe-Haven Flows And Market Reaction
Gold as a safe-haven asset is also drawing attention as investors watch developments in Washington, where a potential U.S. government shutdown is looming. Asian stock markets opened on a cautious note on Monday as traders waited for clarity.
Notably, the SPDR Gold Trust, the largest gold-backed exchange-traded fund, reported a rise in holdings of 0.89% on Friday. Its stockpile increased to 1,005.72 metric tons from 996.85 tons the day before, showing stronger investor demand.
Other precious metals also saw modest gains. Spot Silver rose 1.8% to $46.84 per ounce. Platinum climbed 2.8% to $1,623.88 in 12 months, while Palladium advanced 0.5% to $1,276.94.
Bitcoin had a slight increase, with prices up 2.09% in the past day to $111,793.48. The Bitcoin price outlook remains on watch, but gold’s strong rally underlined its position as the key safe-haven asset as the week began.
Despite the current development, as noted in our earlier post, Michael Saylor predicted Bitcoin would outpace gold tenfold. He cited borderless transfer, programmability, and corporate reserves as major catalysts for this price outlook.
