Gold prices have surged to a fresh record high, extending gains following a weaker-than-expected US employment report released on Friday. The report has led to increased speculation that the Federal Reserve may cut interest rates in the coming months. Bullion prices rose as much as 1.7 per cent to over $US3646, surpassing the previous record also set on Friday. The US payrolls report indicated a slowdown in hiring and an increase in unemployment, reaching the highest level since 2021.
Swaps traders have subsequently increased their bets on interest rate cuts, now pricing in almost three reductions for the remainder of the year. Lower borrowing costs typically bolster the appeal of gold, which does not yield interest. The precious metal has also benefited from robust safe-haven demand amid ongoing concerns about the US central bank’s future policies.
Looking ahead, these renewed hopes for rate cuts will be tested this week as the market awaits benchmark revisions for US jobs data on Tuesday, as well as producer and consumer inflation figures on Wednesday and Thursday. Traders will also be closely monitoring the market’s reaction to auctions of 3-, 10-, and 30-year Treasuries.
Both gold and silver have more than doubled in value over the past three years, driven by increasing geopolitical, economic, and global trade risks, which have amplified demand for safe-haven assets. Escalating attacks against the Federal Reserve have further stoked worries about its independence, contributing to gold prices rallying more than 8% over the past two weeks as demand for safe-haven assets intensifies.
