Gold at record high as demand grows

Spot gold added 0.4% to $3,651.38 per ounce

Gold prices scaled a new high on Tuesday, as a weaker dollar and a drop in bond yields amid growing bets for a U.S. central bank rate cut this month lifted demand for the precious metal.

Spot gold added 0.4% to $3,651.38 per ounce as of 0249 GMT.

We probably will see more upside in gold from here provided that the U.S. central bank delivers with regards to market expectations of seeing multiple rate cuts, KCM Trade Chief Market Analyst Tim Waterer said.

U.S. job growth softened sharply in August and the unemployment rate rose to a nearly four-year high of 4.3%, confirming that labour market conditions were softening and confirming the case for a central bank rate cut next week.

Traders are pricing in an 89.4% probability of a 25-basis-point Fed rate cut at this month’s meeting and a 10.6% probability of a big 50-basis-point cut, according to the CME Group’s FedWatch tool.

Lower interest rates pressure the dollar and bond yields, raising the appeal of non-yielding bullion.

The dollar index dropped to an almost seven-week low against its rivals, making gold more attractive for other currency holders, while the benchmark U.S. 10-year Treasury yield declined to a five-month low.

Meanwhile, the European Central Bank (ECB) is widely expected to hold rates at its meeting on Thursday.

Investors are now awaiting the U.S. producer price data on Wednesday and consumer prices figures on Thursday for further clues into the central bank’s policy path.

A potential short-term catalyst would be if U.S. inflation data comes in below expectations this week, which could see the Fed dial up their dovish levels at their September meeting and could hasten gold’s ambitions of hitting the $3,700 level, Waterer said.

Gold prices have added 38% so far this year, following a 27% jump in 2024, strengthened by a weak dollar, strong central bank accumulation, dovish monetary policy and heightened global uncertainty.