Gold Surges to New Highs Amid Growing Expectations of U.S. Interest Rate cuts
Gold prices reached a new peak as markets increasingly anticipate the Federal Reserve will lower interest rates in September, bolstering the precious metal’s appeal. The rally comes as revised U.S. government data indicates a more significant slowdown in job creation than previously estimated, further fueling speculation about monetary policy easing.
This shift in expectations is especially impactful for investors seeking safe-haven assets and those sensitive to interest rate fluctuations. Lower rates typically diminish the opportunity cost of holding non-yielding gold, driving up demand. The potential for rate cuts also comes as economic indicators suggest a cooling U.S. economy,adding to the factors supporting gold’s upward trajectory.
Tuesday’s data revealed the American economy added 911,000 fewer jobs during the 12 months ending in March than initially reported, signaling a deceleration in employment growth before the implementation of President Trump’s tariffs. This revision adds weight to arguments for a more dovish Federal Reserve stance.
Recent non-agricultural employment data has reinforced the case for a rate reduction at the upcoming September meeting. Market analysis, using the CME Group’s fedwatch tool, currently reflects a near-certain expectation of a 25-basis-point cut, with a slim 6% probability of a larger 50-basis-point reduction.
Gold has already experienced substantial gains this year, increasing by 38% following a 27% rise in 2024. This performance is attributed to a combination of factors including dollar weakness, increased central bank purchases, accommodative monetary policies, and heightened global uncertainty.
In other precious metals trading, immediate silver rose 0.3% to $41 per ounce, platinum increased 0.9% to $1,380.74, and palladium settled at $1,148.57 per ounce.
