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Silver at 14-year peak; gold nears record highs due to US rate cuts

The dollar was weaker and bets on a rate cut by the U.S. Federal Reserve boosted gold to a four-month-high. Silver also reached a new high, surpassing $40 an ounce, for the first since 2011.

By 9:37 am EDT (1337 GMT), spot gold had risen 0.9% to $3,477.56 an ounce, its highest level since April 22, when it reached a record high of $3,500.05. U.S. Gold Futures for December Delivery gained 0.9%, to $3 547.70.

Spot silver rose 2.6% to $40.69 per ounce - its highest level since September 2011.

Labor Day is observed on Monday, September 5, 2018.

Dollar-priced Gold is now cheaper for foreign buyers. The U.S. currency has been trading at its lowest level since July 28, making it the cheapest dollar in a basket.

Ole Hansen is the head of Saxo Bank’s commodity strategy. He said that "gold, and particularly silver, continued Friday's gains. This was supported by U.S. inflation sticking, a weakening consumer mood, (expected), rate cuts... and concerns about Fed independence."

Data released on Friday showed that the U.S. Personal Consumption Expenditures Price Index rose in line with expectations by 0.2% from month to month and 2.6% over a year.

Tim Waterer is the chief market analyst at KCM Trade. He said that silver is moving higher due to lower expectations. A tight supply market also helps to maintain a positive bias.

Mary Daly, President of the San Francisco Federal Reserve Bank, reiterated last week her support for a cut in interest rates, citing risks on the labour market.

The market is waiting for the U.S. jobs report on Friday, expecting that it will allow the Fed rate cuts to resume from September (given) that this supports investment demand," UBS analyst Giovanni Staunovo said.

A poll indicated that the August non-farm payrolls are due on Friday and will have increased by 78,000 jobs compared to 73,000 in July.

Gold that does not yield is usually a good investment in an environment with low interest rates.

U.S. trade representative Jamieson Greer stated on Sunday that the administration of President Donald Trump was continuing to talk with trading partners despite an U.S. Court ruling that most tariffs were illegal.

Palladium rose 1.9%, to $1129.70, and platinum gained 3.2%, to $1408.54. (Reporting and editing by Sumana Nady, Susan Fenton, and Tomasz Janowowski in Bengaluru.

(source: Reuters)