Gold hits fresh record high on US rate cut hopes

Gold prices rose in the European market on Monday, extending gains for the second consecutive day to reach an all-time high, moving toward the $3,800 per ounce barrier for the first time in history, supported by the decline of the US dollar in the foreign exchange market.

This comes amid growing expectations of a more accommodative path for US interest rate cuts, especially after the latest signals from the Federal Reserve, while investors this week await more decisive evidence that could shape the outlook for US monetary policy in the period ahead.

Price Overview

• Gold prices today: Gold rose by 1.1% to ($3,726.68), an all-time high, from the opening level at ($3,685.05), recording a low at ($3,683.93).

• At Friday’s settlement, gold gained 1.1%, its first rise in three days, driven by buying activity from corrective levels.

• Last week, gold rose by 1.2%, marking a fifth consecutive weekly gain, its longest winning streak since late 2024, supported by strong demand for the metal as the best alternative investment.

US Dollar

The dollar index fell on Monday by about 0.15%, retreating from a two-week high at 97.8 points, reflecting a decline in US currency levels against a basket of major and minor counterparts.

Beyond profit-taking and correction activity, US dollar levels are pressured by growing expectations of further Fed rate cuts in the coming period.

US Interest Rates

• The Federal Reserve carried out its first interest rate cut since December, lowering by 25 basis points last week, signaling openness to further easing.

• The Fed’s median projections point to additional rate cuts of 50 basis points in 2025.

• The median expectations of Fed members show the bank moving toward one 25-basis-point cut in 2026, with a similar cut expected in 2027.

• According to the CME FedWatch tool: the pricing of a 25-basis-point Fed rate cut in the October meeting is currently steady at 92%, while the probability of holding rates unchanged stands at 8%.

• Several Fed officials are scheduled to speak this week, with Chair Jerome Powell set to give remarks on Tuesday, as investors closely monitor their comments for clues on the future direction of monetary policy.

• The market is also focused on the release of the US core PCE price index on Friday for indications on the pace of further rate cuts.

Gold Outlook

Giovanni Staunovo, analyst at UBS, said: I expect gold to reach new record levels this week, with the possibility that Fed officials may signal further interest rate cuts.

Staunovo added: The pace and size of potential US interest rate cuts will depend heavily on the economic data scheduled for release in the US starting this week.

SPDR Fund

Gold holdings at SPDR Gold Trust, the world’s largest gold-backed ETF, increased on Friday by 18.9 metric tons, the biggest daily rise since March 21, raising the total to 994.56 metric tons, the highest level since August 12, 2022.