Gold extends record high this morning, solidly above $3600 an ounce. The yellow metal hit a record on Friday’s monthly U.S. jobs report that came in weaker than expected, solidifying bets that the Federal Reserve will cut interest rates next week and possibly as many as three times this year.
The latest nonfarm payrolls data from the Labor Department showed that the number of jobs rose by just 22,000 in August, well below economists’ forecast of 75,000. The unemployment rate also increased to 4.3% It’s the latest indicator of a sputtering economy.
The Fed has said it closely watches both the labor market and inflation when setting monetary policy. Gold is a traditional hedge against economic uncertainty. It also tends to rally when the Fed reduces interest rates, becoming a more attractive alternate investment. Despite a series of rate cuts last year, the Fed has yet to begin reductions in 2025. The Fed last kept interest rates unchanged in July at 4.25% to 4.50%.
December gold futures rose 3.9% last week to settle at $3,653.30 an ounce on Comex. The front-month contract gained 1.3% Friday. Bullion added 5% in August after gaining 1.2% in July and slipping 0.2% in June. It’s up 38% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $18.60 (+0.51%) an ounce to $3671.90 and the DG spot price is $3636.10.
Investors are awaiting the next round of inflation data, for August, later this week for further direction. The producer price index comes out Wednesday, followed by the consumer price on Thursday. The Fed’s favorite inflation measure, the personal consumption expenditures price index, most recently showed that core inflation rose to 2.9% in July, the highest level since February. The Fed’s inflation target is 2%.
In addition to the economic picture, gold has rallied on concerns about the Fed’s independence in setting monetary policy. U.S. President Donald Trump attempted to fire Fed Governor Lisa Cook for alleged mortgage fraud last week and she has sued to retain her job. Trump and his administration have long called for expedited rate cuts.
Separately, Stephen Miran, whom Trump nominated last month to fill the unfinished term of Fed Governor Adriana Kugler, said last week at his confirmation hearing that he doesn’t plant to leave his current position as chair of the White House Council of Economic Advisers if confirmed. That would give the White House a direct line to the traditionally independent central bank.
Gold could rally to almost $5,000 if the Fed’s independence is damaged or if investors shift even a small amount of holdings into gold from Treasurys, Goldman Sachs Group Inc. said last week.
All of the investors tracked by the CME FedWatch Tool are betting that the Fed will cut rates at least 25 basis points 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.
Front-month silver futures rose 2% last week to settle at $41.55 an ounce on Comex,. The metal increased 0.3% Friday. 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 $0.478 (+1.15%) an ounce to $42.030 and the DG spot price is $41.39.
Spot palladium rallied 0.9% last week to $1,122.00 an ounce. But it slid 0.8% Friday. Palladium decreased 7.8% in August after climbing 8.8% in July and surging 14% in June. Palladium dropped 17% last year. The current DG spot price is up $28.60 an ounce to $1147.50.
Spot platinum advanced 1.2% last week to $1,385.10 an ounce. It added 0.6% Friday. It rose 5.9% last month after dropping 3.9% in July and climbing 27% in June. Platinum lost 8.4% in 2024. The DG spot price is currently up $9.30 an ounce to $1392.00.