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Gold nears record high amid US rate cuts

Gold held steady near its all-time highest on Monday. It moved closer to the key $3,600 mark, buoyed by expectations that the U.S. Federal Reserve will cut rates this month after a weaker than expected jobs report last weekend.

As of 0121 GMT, spot gold was unchanged at $3,586.81 an ounce. Bullion reached a record-high of $3,626.10 per ounce on Friday.

U.S. Gold Futures for December Delivery fell by 0.7% to $3.626.010.

The main drivers are the U.S. job data and expectations that the Fed will cut by 50 basis point in September. The marginal change is a significant one compared to the situation before the employment figures were released, said Capital.com's financial market analyst Kyle Rodda.

"We will be able to test $3,600 despite an inflation shock that occurred this week."

The U.S. unemployment rate rose to nearly four-year levels in August. This confirms that the labor market is softening, which will lead the Fed to cut rates next week.

According to CME FedWatch, traders have priced in a rate cut of 25 bp this month. There is an 8% probability that the cut will be a 50 bp jumbo.

Gold becomes cheaper when interest rates are lower.

The Fed will now be focusing on the U.S. Inflation report due out on Thursday, which could provide more information on the expected size of its rate cut.

Bullion prices have risen 37% this year, after a gain of 27% in 2024. This is due to the weakening dollar, central bank purchases, a softerening of monetary policy, and broader geopolitical, economic, and political uncertainty.

China's central banks added gold to their reserves in August. This is the 10th consecutive month that they have purchased bullion.

Gold speculators increased their net long positions to 168.862 contracts in the week ending September 2.

Silver spot fell 0.5% elsewhere to $40.75 an ounce. Platinum increased 0.1% to $1374.35, while palladium remained flat at $1109.71.

(source: Reuters)