Gold extended gains early Wednesday on haven demand for the precious metal and increasing confidence that the Federal Reserve will cut interest rates at its upcoming meeting this month.
Economic and geopolitical uncertainty has kept a floor under prices, since gold is a traditional hedge at such times. The yellow metal is also poised to get a boost from any interest rate cut because it will become a more attractive alternate investment.
December gold futures rose 2.2% Tuesday to settle at $3,592.20 an ounce on Comex. U.S. financial markets were closed Monday for the Labor Day holiday. The front-month contract rallied 2.9% last week. Bullion added 5% in August after gaining 1.2% in July and slipping 0.2% in June. It’s up 36% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $27.90 (+0.78%) an ounce to $3620.10 and the DG spot price is $3550.00.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.32% Tuesday to 990.56 tons, the highest level since August 2022, Reuters reported.
Some of the market uncertainty that has propped up gold prices has come from U.S. President Donald Trump’s tariff policies, which an appeals court found illegal last week. The administration has indicated that it will seek an expedited ruling from the U.S. Supreme Court.
Trump’s attempt last week to fire Fed Governor Lisa Cook for alleged mortgage fraud and her suit to retain her job have also triggered concerns about the central bank’s ongoing independence before this month’s key rate decision. Trump and his administration have long called for expedited rate cuts.
The Fed has said it closely watches inflation and the labor market when setting monetary policy. The Fed’s favorite inflation measure, the personal consumption expenditures price index, came out Friday with July data. The measure showed that core inflation rose to 2.9% in July, the highest level since February. The Fed’s inflation target is 2%.
The closely watched monthly U.S. jobs report comes out Friday with August data.
Nevertheless, almost 92% of the investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates this month. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. The Fed kept interest rates unchanged in July at 4.25% to 4.50%, a rate that it’s held all year.
Front-month silver futures gained 2.1% Tuesday to settle at $41.59 an ounce on Comex. The December contract increased 3% last week. Silver rallied 11% last month after rising 1.5% in July and increasing 9.5% in June. It rose 21% in 2024. The December contract is currently up $0.208 (+0.50%) an ounce to $41.800 and the DG spot price is $41.10.
Spot palladium increased 2.8% Tuesday to $1,143.00 an ounce. It fell 1.9% last week. Palladium decreased 7.8% in August after climbing 8.8% in July and surging 14% in June. Palladium dropped 17% last year.
Spot platinum rose 2.4% Tuesday to $1,401.70 an ounce. It gained 0.2% last week. It rose 5.9% last month after dropping 3.9% in July and climbing 27% in June. Platinum lost 8.4% in 2024.
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