Gold prices surged to their highest level in over four months during Asian trading on Monday, buoyed by expectations of a Federal Reserve rate cut and safe-haven demand triggered by U.S. tariff uncertainty and political developments affecting the central bank.
Spot gold advanced 0.9% to $3,480.56 an ounce, marking its strongest level since mid-April, while December gold futures jumped 1% to $3,551.82/oz by 01:55 ET (05:55 GMT). This move extends bullion’s recent rally, with gold poised for a fifth consecutive day of gains after climbing nearly 5% in August. Silver also rose sharply, reaching a 14-year high.
Rate Cut Bets and Jobs Data Support Gold
Investor interest in gold increased after the latest U.S. personal consumption expenditures (PCE) price index largely matched expectations, reinforcing expectations for a September Fed rate cut. The CME FedWatch tool shows nearly a 90% probability of a 25-basis-point reduction. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making bullion more appealing. Market attention now turns to U.S. nonfarm payrolls later this week, which could influence near-term rate cut expectations.
Trade and Political Risks Boost Safe-Haven Demand
Safe-haven flows into gold were also supported by trade policy uncertainty. Last week, a U.S. appeals court ruled many Trump-era tariffs unlawful but kept them in place until October 14 to allow time for a Supreme Court appeal. Meanwhile, political pressure on the Fed added to caution after President Donald Trump attempted to remove Federal Reserve Governor Lisa Cook over alleged mortgage fraud. Cook has rejected the move and filed a lawsuit challenging her dismissal.
Other Metals Follow Bullion Higher
Precious metals broadly advanced Monday, with platinum futures up 1.3% to $1,346.65/oz and silver futures climbing 1.5% to $41.32/oz, the highest since August 2024. Copper markets were largely stable, with London Metal Exchange copper futures at $9,934.65 a ton and U.S. copper futures slipping 0.2% to $4.60 per pound.
A private survey in China, the world’s largest copper consumer, showed factory activity expanded at its fastest pace in five months in August amid easing U.S.-China trade tensions. These results contrasted with official data reporting a fifth consecutive month of contraction, hinting at early signs of industrial recovery.
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