Weak U.S. jobs data fuels investor demand for bullion
Gold prices soared to a new all-time high on Monday, surpassing the symbolic $3,600 mark as investors grew increasingly confident that the Federal Reserve will lower interest rates at its upcoming policy meeting. Spot gold climbed 0.7% to $3,612.20 per ounce after reaching an intraday peak of $3,616.64. U.S. gold futures for December delivery held steady at $3,653.10.
This surge extends a powerful rally that has seen bullion rise 37% so far this year, on top of a 27% gain in 2024. The upward trend is being driven by a combination of a weakening U.S. dollar, strong central bank purchases, dovish monetary expectations, and elevated geopolitical risks that continue to unsettle global markets.
Labor market data supports rate cut expectations
Friday’s jobs report further strengthened the case for monetary easing. The U.S. economy added fewer jobs than expected in August, and the unemployment rate rose to 4.3%, the highest level in nearly four years. This softening labor data reinforced the view that the Fed is likely to cut rates, with futures markets now pricing in a 90% probability of a 25-basis-point reduction, according to the CME FedWatch tool.
Carlo Alberto De Casa, analyst at Swissquote, noted that expectations of lower interest rates are boosting gold demand. He also pointed to continued uncertainty in the geopolitical landscape and robust central bank buying as key drivers of the metal’s strength.
Lower interest rates tend to support gold by reducing the opportunity cost of holding non-yielding assets, while also weakening the dollar and making gold more attractive to investors using other currencies.
Investor positioning and upcoming inflation data
Analysts at UBS project gold prices could rise to $3,700 per ounce by mid-2026, citing persistent demand and supportive macroeconomic trends. Meanwhile, speculative interest in gold is climbing, with traders increasing net long positions by 20,740 contracts to 168,862 in the week ending September 2.
Rhona O’Connell of StoneX added that the current rally is also being bolstered by commodity trading advisor (CTA) activity, which has helped maintain the momentum in recent sessions.
The focus now shifts to Thursday’s U.S. inflation data, which could provide additional insight into the Fed’s decision-making process. Any indication that inflation is easing could further cement the outlook for interest rate cuts, giving gold an additional boost.
Yields slide as markets brace for monetary easing
In the bond market, benchmark 10-year U.S. Treasury yields hovered near five-month lows, reflecting investor expectations of a softer policy stance from the central bank. Lower yields generally support gold prices by diminishing returns on fixed-income assets.
With economic uncertainty still looming and the Fed’s next move expected within days, gold remains a favored safe-haven asset among investors seeking stability amid market volatility and geopolitical tension.
