Gold hit its highest level in more than four months on Monday, trading within about $23 of its all-time peak, supported by expectations of a Federal Reserve rate cut and a weaker US dollar, while silver broke above $40 an ounce for the first time since 2011.

Spot gold rose 0.9% to $3,477.56 an ounce by 9:37 a.m. Eastern Time (1337 GMT), its highest since April 22 when it touched the record of $3,500.05. December gold futures climbed by the same 0.9% to $3,547.70.

Spot silver jumped 2.6% to $40.69 an ounce, its highest since September 2011.

Markets in the United States were closed on Monday for the Labor Day holiday.

The US dollar index fell close to its lowest since July 28 against a basket of currencies, making dollar-priced bullion cheaper for overseas buyers.

Ole Hansen, head of commodity strategy at Saxo Bank, said: “Gold, and especially silver, extended strong gains from Friday, supported by sticky US inflation, weak consumer confidence, and rate-cut expectations … alongside concerns over Federal Reserve independence.”

Data on Friday showed the US Personal Consumption Expenditures (PCE) index rose 0.2% month-on-month and 2.6% year-on-year, in line with expectations.

Tim Waterer, chief market analyst at KCM Trade, said: “Silver is moving higher in response to rate cut expectations, while tight supply in the market is helping to reinforce the bullish trend.”

Mary Daly, president of the San Francisco Federal Reserve, last week reiterated her support for rate cuts in a social media post, citing risks tied to the labor market.

Giovanni Staunovo, analyst at UBS, said: “The market is looking ahead to Friday’s US jobs report, expecting it will allow the Fed to resume rate cuts starting in September, which supports investment demand.”

A Reuters poll forecasts nonfarm payrolls increased by about 78,000 in August, compared with 73,000 in July.

Gold, which yields no interest, typically performs well in a low-rate environment.

In a separate development, US Trade Representative Jamieson Greer said Sunday that President Donald Trump’s administration continues discussions with trade partners despite a US court ruling that deemed most tariffs illegal.

Among other precious metals, platinum rose 3.2% to $1,408.54, while palladium gained 1.9% to $1,129.70.

US markets are closed on Monday for Labor Day, with stock and bond trading set to resume on Tuesday.

Government data released last Friday showed that the US Personal Consumption Expenditures (PCE) index — the Federal Reserve’s preferred gauge of inflation — rose strongly in July, while core inflation accelerated as tariffs pushed up the cost of certain goods. The PCE index rose 0.2% month-over-month and 2.6% year-over-year, both in line with expectations.

Traders increased their bets that the Federal Reserve will cut interest rates by 25 basis points at its September policy meeting, raising the probability of this scenario to about 89%, up from 85% before the data release, according to the FedWatch tool.

At Friday’s close, the Dow Jones Industrial Average fell 0.2% (92 points) to 45,545, posting a 0.2% weekly loss but a 4.5% monthly gain. The index recorded a high of 45,616 and a low of 45,377.

The broader S&P 500 declined 0.6% (41 points) to 6,460, logging a 0.1% weekly loss but a 3.6% monthly gain in August. It touched a high of 6,491 and a low of 6,444.

The Nasdaq dropped 1.2% (249 points) to 21,455, with a 0.2% weekly loss but a 3.9% monthly gain. The tech-heavy index reached a high of 21,631 and a low of 21,398.

Oil prices rose by 1% on Monday amid concerns over supply disruptions from intensified airstrikes between Russia and Ukraine, in addition to a weaker US dollar.

Brent crude gained 62 cents, or 0.9%, to $68.10 a barrel by 10:19 GMT, while US West Texas Intermediate (WTI) rose 65 cents, or 1%, to $64.66 a barrel. Trading was expected to be limited due to a public holiday in the United States.

Both Brent and WTI posted their first monthly loss in four months in August, falling more than 6% as OPEC+ supply increased.

Ole Hansen, head of commodity strategy at Saxo Bank, said: “Crude oil fell in August and September started without clear direction within existing ranges, as concerns about a potential supply glut in the fourth quarter are being balanced against geopolitical tensions.”

He added that investor attention is turning to Beijing, where Chinese President Xi Jinping, Russian President Vladimir Putin, and Indian Prime Minister Narendra Modi are attending a regional summit, alongside the upcoming OPEC+ meeting scheduled for September 7.

Markets remain concerned over Russian oil flows, with weekly shipments from Russian ports falling to a four-week low of 2.72 million barrels per day, according to tanker-tracking data cited by ANZ analysts.

Ukrainian President Volodymyr Zelensky pledged on Sunday to retaliate with more strikes inside Russia, after Russian drone attacks targeted energy facilities in northern and southern Ukraine. Both countries have escalated airstrikes in recent weeks, targeting energy infrastructure and disrupting Russian oil exports.

A Reuters poll on Friday showed oil prices are unlikely to post major gains this year from current levels, as higher output from top producers raises the risk of oversupply, compounded by the impact of US tariff threats on demand growth.

HSBC analysts said in a note that oil inventories are expected to rise in the fourth quarter of 2025 and the first quarter of 2026, with a surplus estimated at around 1.6 million barrels per day in the fourth quarter.

On another front, this week’s US jobs report will provide a gauge of economic health and test investor confidence that a Fed rate cut is imminent — a belief that has supported risk appetite toward assets such as commodities.

Ahead of the data, the dollar was near its lowest in five weeks on Monday, making oil cheaper for buyers using other currencies.

The US dollar fell to its lowest level in five weeks on Monday, as investors awaited a series of US labor market data this week that could influence expectations for the Federal Reserve’s monetary easing path.

Traders were also assessing US inflation data released on Friday, a court ruling that deemed most of the tariffs imposed by former President Donald Trump illegal, and the ongoing dispute between the US president and the Federal Reserve over his attempt to dismiss Governor Lisa Cook.

According to the CME FedWatch tool, money markets are now pricing in nearly a 90% probability of a 25-basis-point rate cut in September, and about 100 basis points of easing by the fall of 2026.

Against a basket of currencies, the dollar fell 0.22% to 97.64, after touching 97.534, its lowest since July 28. It had posted a monthly decline of 2.2% on Friday.

The main investor focus will be on Friday’s US nonfarm payrolls report, preceded by job openings data and private sector employment figures.

Analysts said the US economy is no longer outperforming as it did through much of the past decade, which justifies dollar weakness, while further signs of labor market slowdown are expected to reinforce this trend.

Klaus Baader, chief economist at Société Générale, said: “Severe weakness in the economic data may point to a stronger Fed response than markets currently expect, but if the weakness in May and June turns out to be just a statistical mirage, there will be no justification for cutting rates given the near certainty of rising inflation next year.”

Some analysts see a possibility that the Fed could cut rates by 50 basis points later this month.

The euro rose 0.32% to $1.1719, while the British pound gained 0.16% to $1.3525. US markets are closed on Monday for a public holiday.

Political attention is turning to France, where the government faces the possibility of losing a confidence vote over wide-ranging budget cuts. Analysts noted that such risks usually weigh on the currency when there are clear signs of contagion within the eurozone, which does not appear to be the case at present.

Investors are also tracking US trade policy as Washington continues negotiations with key trading partners. Mohit Kumar, economist at Jefferies, said: “We don’t expect the court ruling to have a major market impact, as the case will move to the Supreme Court, which is likely to rule in Trump’s favor.”

The dollar also faced added pressure from concerns about Fed independence, as Trump intensified his campaign to exert greater control over monetary policy. George Saravelos, global head of FX research at Deutsche Bank, said: “Fiscal dominance risks should be more evident, either through higher long-term US inflation expectations or a greater discount on the dollar, but neither has materialized yet.”

“Fiscal dominance” refers to a situation in which central banks are pressured to ease monetary policy in order to help finance large budget deficits.

The dollar was little changed at 147.00 yen after a 2.5% monthly decline in August. The onshore Chinese yuan stabilized at 7.1344, ending a six-day losing streak, after falling to 7.1260 on Friday — its lowest level since Trump’s US election victory in early November 2024.

Lee Hardman, senior FX strategist at MUFG, said: “By setting the daily reference rates at lower levels, the People’s Bank of China signaled that policymakers in Beijing are more comfortable allowing the yuan to strengthen against the US dollar in the near term.”

He added that the move “may reflect that Chinese policymakers are less concerned about downside growth risks in the short term.”