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Gold rallies above $3,600/oz to a record high as Fed rate-cut bets are firm

Gold surged above $3,600 per ounce for the first time Monday, setting a new record high, as weak U.S. employment data reinforced expectations that the Federal Reserve would cut interest rates the following week.

Gold spot rose by 1.3%, to $3,631.66 an ounce at 9:59 am EDT (1349 GMT). Bullion reached a new record of $3,636.69.

U.S. Gold Futures for December Delivery rose 0.5% to $3670.80.

Peter Grant, senior metals analyst at Zaner Metals and vice president, believes that the yellow metal will continue to rise in price, reaching $3,700-3,730 within the next few months.

The bullion market could be sustained by the continued softening of the labor market and the expectation that Fed rates will continue to fall into early 2026.

The Friday jobs report revealed that U.S. employment growth was slowed dramatically in August. According to CME FedWatch, traders now expect a 90 percent chance of the Fed cutting rates by a quarter point at its September meeting.

Low rates reduce the cost of holding bullion that does not yield.

Gold prices have risen 38% this year after rising 27% in 2024. This is due to the dollar's softening, central bank accumulations, dovish monetary policies, and increased global uncertainty.

China's central banks extended its gold buying streak to 10 consecutive months in August, according to official data released on Sunday.

The benchmark 10-year U.S. Treasury rates, on the other hand, are nearing their lowest levels in five months.

Investors will now be waiting for the U.S. consumer price data and producer prices to come out on Wednesday.

Fawad Rasaqzada is a market analyst for City Index and FOREX.com. He said that if the U.S. Dollar and yields continue to fall, the bullish momentum should also continue in gold.

Razaqzada said that "if U.S. data surprises us in the next few weeks with surprising resilience, gold may correct from its current elevated levels."

Silver spot rose 1%, to $41.39 an ounce. Platinum rose 0.7% to 1,382.25 and palladium rose 2.1% to 1134.56.

(source: Reuters)