Gold Nears $3,600, What's the Trigger?
Gold held near a record high after weak US jobs data fueled a surge in expectations for a Fed interest rate cut. At the start of the Asian session, spot prices were just less than $10 from their recent peak near $3,600 an ounce, after briefly surging 1.5% late Friday. Markets view slowing hiring and a rise in the unemployment rate to its highest level since 2021 as compelling reasons for more easing policy.
Derivatives market participants are now pricing in nearly three interest rate cuts by the end of the year. Lower interest rates make non-yielding assets like gold more attractive. Demand for hedge funds also remains strong amid concerns about the direction and independence of the US central bank.
In the past three years, gold and silver prices have more than doubled, buoyed by geopolitical, economic, and global trade risks. Pressure on the Fed's independence has increased as President Donald Trump's attacks on the Fed escalate, including his ambition to gain a "majority" at the central bank and lower interest rates. Investors are also awaiting a crucial ruling regarding the legal basis for the removal of Fed Chair Lisa Cook. Goldman Sachs believes gold could potentially approach $5,000 if the Fed's independence is compromised and some funds shift from Treasuries to bullion.
Another supporting factor: the US administration officially exempted gold bullion from country-based tariffs, clearing up previous confusion among importers. In China, the People's Bank of China (PBOC) increased its gold reserves for the 10th consecutive month in August, underscoring its efforts to diversify away from the US dollar. At 6:52 a.m. in Singapore, spot gold rose 0.2% to $3,592.91 per ounce; the Bloomberg Dollar Index rose 0.1%. Silver and platinum weakened slightly, while palladium was virtually unchanged. (ayu)
Source: Newsmaker.id
