Gold Prices Stay Near Record Highs on Fed Rate-Cut Bets and Safe-Haven Demand
Gold prices held close to record highs on Monday, trading just under $3,600 per ounce. The rally came as investors increased their bets on a U.S. Federal Reserve rate cut after weaker U.S. jobs data showed slowing employment growth and higher unemployment at 4.3%. Many now expect the Fed to cut rates by 25 basis points, while some still see a chance of a larger 50-point move.
Lower interest rates usually support bullion because it does not pay interest. When Treasury yields fall, gold becomes more attractive compared to bonds. A weaker U.S. dollar has also added to the strength of the current gold rally, making the metal cheaper for holders of other currencies in the forex market.
Safe-haven demand is another big driver. With global markets facing economic slowdown worries, trade tensions, and geopolitical risks, both investors and central banks are building larger gold reserves. Gold is widely seen as an inflation hedge and a store of value during uncertain times.
So far this year, gold has gained nearly 37%, following a strong 27% rise in 2024. This makes it one of the best-performing assets in the market. Traders are now waiting for the next U.S. inflation report and fresh signals from the Federal Reserve to decide whether the bullion rally will continue.
Impact:
Gold might break above $3,600 if the Fed cuts rates and safe-haven demand stays strong, though short-term volatility could rise around upcoming U.S. data.
