Gold surged to a fresh record high Monday as a weakening U.S. dollar, falling Treasury yields and heightened expectations for a Federal Reserve rate cut fueled investor demand for the precious metal, underscoring a broad shift toward safe-haven assets amid global economic uncertainty.
Spot gold climbed 1.1% to $3,680.80 an ounce by 1:44 p.m. EDT after briefly touching $3,685.39, an all-time intraday high. U.S. gold futures for December delivery settled 0.8% higher at $3,719.00. The rally builds on last week's 1.6% gain and has driven gold prices up 41.8% this year, adding $1,600 per ounce since 2023.
The dollar index fell 0.3% to a one-week low, making bullion cheaper for overseas buyers, while yields on the 10-year Treasury note edged lower as traders braced for the Fed's two-day policy meeting. Markets are nearly certain the central bank will deliver its first rate cut since December, with the CME FedWatch tool showing odds favoring a 25-basis-point move and some investors holding out hope for a 50-basis-point cut.
"Expectations of a 25-basis-point rate cut are largely baked into the cake at this point," said Peter Grant, vice president and senior metals strategist at Zaner Metals. "There could be one or two more rate cuts before the year-end."
Jose Gomez, co-founder of Summit Metals, sees further room for prices to rise. "The price target for gold for 2025 (end) is around $3750 if the interest rate is reduced," he said. "The current price already reflects an interest rate reduction; however, if all things stay equal $3,750 is possible."
Analysts point to a convergence of macroeconomic drivers beyond interest rates. "The U.S. dollar has weakened, making gold cheaper for foreign buyers and adding further momentum to the move," said Tracy Shuchart, senior economist at Ninja Trader. She added that "persistent inflation, which has been running above the Fed's target, also has reinforced gold's appeal as a long-term store of value."
Thomas Winmill, portfolio manager at Midas Funds, cited the mounting U.S. debt burden as another catalyst. "The continuous creation of U.S. dollars in this environment has and will continue to lead to a depreciated U.S. dollar, which causes U.S. price inflation and an increase in the price of all 'hard' assets, including gold," he said.
Central banks, particularly in emerging markets, have been accumulating gold at a record pace as a hedge against currency risk. "That steady accumulation has put real pressure on the supply side and has put an underlying bid in the gold market as they will buy at any price," Shuchart said.
Silver and other precious metals also advanced. Spot silver rose 1.1% to $42.62 an ounce, platinum gained 0.7% to $1,400.77, while palladium slipped 0.3% to $1,193.21.
