Gold tops the $3800 benchmark, hitting yet another record high early Monday as a potential U.S. government shutdown and geopolitical concerns drove safe-haven demand. The bullion was also buoyed by a softer dollar and expectations of more U.S. rate cuts. The surge follows gold’s sixth consecutive weekly gain as investors await further signals about the state of the economy and monetary policy.
The Federal Reserve’s favorite inflation report, the personal consumption expenditures price index, came out Friday and showed that so-called core inflation – which excludes volatile food and energy prices, held at 2.9% year on year in August, while the figure was also unchanged at 0.2% month on month. The Fed has said it’s balancing inflation, which is above the central bank’s target, with a worsening job market as it sets monetary policy.
December gold futures rose 2.8% last week to settle at $3,809.00 an ounce on Comex, after the front-month contract gained 1% Friday. Bullion is up 8.3% this month after adding 5% in August and gaining 1.2% in July. It’s up 44% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $43.40 (+1.13%) an ounce to $3883.00 and the DG spot price is $3829.40.
The fact that core inflation held last month is likely to keep the Fed on its current trajectory of interest rate cuts, with the market expect two more before the end of the year. Lower interest rates are typically bullish for gold, making the precious metal a more attractive alternate investment.
Headline PCE gained 2.7% year-over-year in August, while the month-on-month figure grew 0.3%, according to data last week from the Commerce Department. Gold also rallied last week after U.S. President Donald Trump announced another round of tariffs, adding to geopolitical and economic uncertainty. Gold is a traditional risk-off trade.
A number of Fed officials will speak this week and may provide more direction to the market. U.S. consumer confidence data for September comes out Tuesday, followed by key monthly jobs reports in the latter half of the week.
The Fed cut interest rates for the first time in nine months earlier in September, lowering them by 25 basis points to 4.00% to 4.25%.
About 89% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by 25 basis points in October, with the rest expecting the central bank to hold rates unchanged. 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 8.6% last week to settle at $46.66 an ounce on Comex, after the December contract gained 3.4% Friday. Silver is up 15% this month after rallying 11% in August and rising 1.5% in July. It rose 21% in 2024. The December contract is currently up $0.064 (+0.14%) an ounce to $46.720 and the DG spot price is $46.81.
Spot palladium gained 11% last week to $1,288.50 an ounce and increased 2.4% Friday. Palladium is up 16% in September after declining 7.8% in August and climbing 8.8% in July. Palladium dropped 17% last year. Currently, the DG spot price is down $10.10 an ounce to $1278.00.
Spot platinum rallied 12% last week to $1,578.40 an ounce after rising 3.4% Friday. It’s up 15% in September after rising 5.9% last month and dropping 3.9% in July. Platinum lost 8.4% in 2024. The DG spot price is currently up $26.10 an ounce to $1599.80.
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