Gold was set for another record high on Tuesday, holding well above the $3,600-mark crossed in the previous session, as growing bets of a US rate cut weakened the dollar and pushed bond yields lower, boosting demand for the precious metal.
Spot gold was up 0.4% at $3,647.98 per ounce, as of 0726 GMT, after hitting a record high of $3,659.10 earlier in the session. US gold futures for December delivery rose 0.3% higher to $3,688.10.
Gold prices have gained nearly 39% this year, following a 27% jump in 2024, bolstered by a soft dollar, strong central bank accumulation, dovish monetary policy and heightened global uncertainty, Reuters said.
The dollar index fell to a near seven-week low against rivals, making gold more attractive to other currency holders, while benchmark US 10-year Treasury yields held near five-month lows.
"Bulls have been energized by the market’s rate cut convictions, sending gold to fresh record highs. The softer dollar also helped pave the way for $3,600, while bullion-backed inflows and central bank purchases add to the strong mix of tailwinds," said Han Tan, chief market analyst at Nemo.money.
Traders expect an 88% chance of a 25-basis-point Federal Reserve rate cut next week and a 12% probability of a jumbo 50-bp reduction, CME Group's FedWatch tool showed. This comes after Friday's data showed U.S. job growth weakened sharply in August.
Lower interest rates pressure the dollar and bond yields, raising the appeal of the non-yielding bullion.
Investors now await US producer price data on Wednesday and consumer price data on Thursday for further rate cut cues.
"We may see spot gold flirting with $3,700 this week if markets are shown drastically lowered revisions to US jobs data and shockingly low CPI prints. Still, gold markets are likely to reserve their bigger price reaction for the latest policy clues out of the FOMC meeting," Han Tan added.
Elsewhere, spot silver edged 0.1% higher to $41.35 per ounce. Platinum gained 0.8% to $1,394.12 and palladium climbed 1.4% to $1,149.61.
