Gold breaks $3,600 as Fed rate cut bets and market volatility intensify
Investors signal growing uncertainty as precious metals, oil, and currency markets react to shifting US economic indicators and geopolitical tensions.
Investors signal growing uncertainty as precious metals, oil, and currency markets react to shifting US economic indicators and geopolitical tensions.
Gold prices surged to a record high on Monday morning, breaching the $3,600 mark as investors doubled down on bets that the Federal Reserve will cut interest rates at its upcoming September meeting.
The spot price of gold rose 0.6% to $3,611.08 per troy ounce, while futures briefly touched $3,639.10 before pulling back slightly.
The catalyst? A disappointing US jobs report showing the unemployment rate climbing to 4.3%—its highest level since late 2021—and softer-than-expected job creation in August. With signs that the labor market is cooling, market participants increasingly expect the Fed to ease its monetary stance.
According to the CME FedWatch tool, traders now fully price in a 25-basis point cut and assign an 8% probability to a more aggressive 50-basis point move.
“The main driver is US jobs data and the expectations now that the Fed could cut,” said Kyle Rodda, analyst at Capital.com. “All of the tailwinds are blowing for gold.”
Gold’s rally marks a continuation of a broader trend: the precious metal has already gained 45% this year, after a 27% rise in 2024. Analysts say the current surge is powered by a confluence of dovish monetary expectations, a weakening US dollar, and heightened demand from retail investors.
Atkinson Bullion & Coins, which recently joined the London Bullion Market Association (LBMA), reported record-high demand for physical gold and tax-free silver coins, citing investor unease around fiscal uncertainty.
“The outlook for lower interest rates in the USA now seems a certainty,” said co-founder Paul Atkinson. “Alongside this, the bond market is making decade highs, increasing pressure on the UK government’s ability to manage debt interest payments.”
Attention will now turn to Thursday’s US inflation report, which could either reinforce or undermine the Fed’s current trajectory.
Oil prices also saw gains in early European trading. Brent crude climbed 1.6% to $66.57 per barrel, while West Texas Intermediate rose 1.7% to $62.92.
The increase follows the latest OPEC+ decision to raise production by just 137,000 barrels per day in October—a cautious move compared to earlier monthly hikes of more than 500,000 barrels.
Geopolitical risks are also weighing on the market. President Trump’s signal of a second phase of sanctions on Russia over its invasion of Ukraine has stoked supply fears.
“Buying emerged as the OPEC+ output increase was smaller than anticipated,” said Satoru Yoshida, commodity analyst at Rakuten Securities. “Views that Russian oil won’t flood the market also supported prices.”
In currency markets, the pound edged up 0.2% to $1.3525, lifted by dollar weakness in the wake of US labor data. The euro-pound exchange rate remained flat at €1.1522. Analysts at MUFG revised their USD forecasts downward, citing “building downside risks” tied to the Trump administration’s increasing influence over Federal Reserve policy.
Yet sterling’s gains could prove short-lived. The UK’s fiscal outlook remains a concern, with continued uncertainty surrounding the delayed autumn Budget and concerns over inflation and economic performance.
Meanwhile, the FTSE 100 was trading modestly higher on Monday morning, up 0.1% at 9,217 points, reflecting cautious optimism amid global volatility.
For finance leaders, the current macroeconomic backdrop demands heightened attention to liquidity, asset allocation, and interest rate sensitivity.
With gold hitting historic highs, the Fed poised to pivot, and energy markets moving on geopolitical news, the coming months may test corporate treasury strategies and FX hedging frameworks alike.