Gold Extends Rally to Four-Month High as Rate Cut Bets and Safe-Haven Demand Rise

Gold prices climbed to their highest level since mid-April in Asian trading on Monday, driven by strong expectations of a September Federal Reserve rate cut and heightened safe-haven demand amid Fed independence concerns and tariff-related uncertainty.

• Spot Gold: $3,480.56/oz (+0.9%)
• Gold Futures (December): $3,551.82/oz (+1%)
• August performance: Nearly +5%, marking the fifth consecutive day of sharp gains.

Fed Rate Cut Bets Support Bullion

Markets increased wagers on a 25 basis point cut in September after the PCE inflation index came broadly in line with forecasts.

• CME FedWatch tool: Pricing in ~90% probability of a September cut.
• Lower rates reduce the opportunity cost of holding gold, making the non-yielding asset more attractive.

Attention now shifts to U.S. non-farm payrolls data later this week.

• Weaker jobs data → stronger case for easing.
• Stronger data → risk of markets scaling back rate cut bets.

Safe-Haven Demand Bolstered by Tariffs and Fed Tensions

• A U.S. appeals court ruling deemed many Trump-era tariffs illegal, raising uncertainty about duties on Chinese imports. The court kept tariffs in place until October 14, pending a Supreme Court appeal.
• Political pressure on the Fed has intensified, with Trump attempting to dismiss Fed Governor Lisa Cook over alleged mortgage fraud. Cook has rejected Trump’s authority and filed a lawsuit.

This tug-of-war between politics and monetary policy has increased investor demand for safe-haven assets like gold.

Silver Hits 14-Year High; Metals Mixed

• Silver Futures: $41.32/oz (+1.5%), a 14-year high.
• Platinum Futures: $1,346.65/oz (+1.3%).
• Copper: LME futures flat at $9,934.65/ton; COMEX futures edged 0.2% lower at $4.60/lb.

Chinese factory activity showed mixed signals:

Private survey (Caixin): strongest expansion in five months, hinting at improving demand for industrial metals like copper.

Official PMI: contracted for a fifth straight month.