By Anushree Mukherjee
(Reuters) – Gold vaulted past $3,700 an ounce levels for the first time on Tuesday as rising bets on a rate cut by the Federal Reserve this week fueled a rally that has been stoked by safe-haven demand, central bank buying and a weaker dollar.
Spot gold rose 0.5% to $3,698.67 per ounce, as of 10:21 am ET (1421 GMT), after hitting a record high of $3,702.95 earlier in the session. U.S. gold futures for December delivery rose 0.5% to $3,736.90.
“Gold is surging on a sharply weaker dollar, which is at lows not seen since July,” said Tai Wong, an independent metals trader.
The dollar fell to a more than two-month low against rivals. A weaker greenback makes gold less expensive for other currency holders. [USD/]
“Global growth uncertainty and geopolitical risk continue to keep haven demand high but the gold rally is being driven largely by anticipation of aggressive rate cuts from the Federal Reserve,” said Zain Vawda, analyst at MarketPulse by OANDA.
Traders are pricing in a near-certain 25-basis-point rate cut at the end of the two-day meeting on September 17, with a small chance of a 50-bp reduction, per the CME FedWatch tool.
U.S. President Donald Trump in a social media post on Monday called for Fed Chair Powell to enact a “bigger” rate cut.
Non-yielding bullion tends to do well in a low-interest rate environment.
Bullion, renowned as a hedge against uncertainties, has surged about 41% since the start of the year. It breached the mark of $3,600 per ounce on September 8.
Analysts say the rally has been driven by a potent mix of sustained central bank buying, intensifying safe-haven flows, a global shift away from the U.S. dollar, which is also facing persistent weakness.
Spot gold surged 27% in 2024 and broke the $3,000 mark for the first time in March, as uncertainty over Trump’s trade policies drove investors toward the safe-haven asset.
Meanwhile, Commerzbank raised its gold price forecast to $3,600 per troy ounce by the end of this year and to $3,800 by the end of 2026.
Elsewhere, spot silver was up 0.3% at $42.85 per ounce, highest level since September 2011.
Platinum fell 0.5% to $1,394.04 and palladium eased 0.9% to $1,173.75.
(Reporting by Anushree Mukherjee in Bengaluru; Editing by Anil D’Silva and Shailesh Kuber)
