Gold prices climbed to their highest level in more than four months on Monday, supported by growing expectations that the U.S. Federal Reserve will move ahead with an interest rate cut this month. Silver also rallied strongly, crossing the $40-per-ounce mark for the first time in over a decade.
Spot gold rose 0.8% to $3,475.72 per ounce by 02:38 GMT, its strongest level since April 23. U.S. gold futures for December delivery advanced 0.9% to $3,546.10. Analysts said dovish comments from San Francisco Fed President Mary Daly encouraged traders to look beyond Friday’s slightly higher core Personal Consumption Expenditures (PCE) inflation data, keeping expectations of a 25-basis-point rate reduction alive.
“Mary Daly’s remarks helped markets maintain their conviction for a September rate cut, even after the PCE data,” noted Matt Simpson, senior analyst at City Index. He added that a U.S. appeals court ruling against most of former President Donald Trump’s tariffs weakened the dollar further, providing another boost to bullion.
Government data on Friday showed that the PCE price index increased 0.2% month-on-month and 2.6% year-on-year, broadly in line with forecasts. Daly, in a social media post, reiterated that labor market risks justify easing monetary policy.
Gold, which does not yield interest, tends to benefit in lower-rate environments as the opportunity cost of holding the metal decreases.
Silver also staged a strong rally, gaining 2% to $40.44 per ounce — a level not seen since September 2011. “The U.S. bank holiday has reduced liquidity, exaggerating moves in gold and silver,” said Tim Waterer, chief market analyst at KCM Trade. “Silver is advancing on Fed cut expectations, while limited supply continues to support an upward bias.”
Among other precious metals, platinum climbed 0.8% to $1,375.41 per ounce, while palladium gained 1.1% to $1,121.09.
