Gold hits record high as dollar weakens ahead of Fed rate decision

Global gold prices surged to an all-time high on Monday (September 15), supported by a softer US dollar and falling Treasury yields, as investors focused on the upcoming Federal Reserve meeting, which could shape policy for the rest of the year.

Spot gold rose 1.1% to US$3,680.80 per ounce at 13:44 EST (17:44 GMT), after reaching a record peak of US$3,685.39 earlier in the session. Bullion prices have climbed around 1.6% over the past week. Meanwhile, US gold futures for December delivery closed 0.8% higher at US$3,719.00.

The US dollar index (DXY) fell 0.3% to its lowest level in a week, making gold more attractive to holders of other currencies. Yields on 10-year US Treasury bonds, a benchmark for fixed income, also declined slightly.

Market expectations are that the Fed will cut interest rates by 0.25% on Wednesday, the first reduction since December, with some anticipating a further 0.50% cut later in the year, according to CME’s FedWatch tool.

“Markets have already priced in a 0.25% rate cut,” said Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals. He added that one or two additional cuts could follow before the end of 2025.

Gold’s next upside targets are seen at US$3,700, followed by US$3,730 and US$3,743. As a non-yielding asset, gold is widely regarded as a safe haven during periods of broad uncertainty and is expected to perform well in a low-rate environment.

Independent metals trader Tai Wong noted that reports over the weekend suggesting China may ease rules on gold imports and exports sparked strong buying. Both government and private-sector demand remain key drivers of the recent rally.

Recent US data showed the consumer price index rose at its fastest pace in seven months in August, while employment figures indicated a weakening labour market, reinforcing expectations that the Fed will continue its rate cuts.

Other precious metals also moved higher: silver gained 1.1% to US$42.62 per ounce, platinum rose 0.7% to US$1,400.77, while palladium fell 0.3% to US$1,193.21.

Morning price update

Bloomberg reported that gold prices rose 0.2% to US$3,686.39 per ounce as of 9:01 a.m. Singapore time, following a 1% gain on Monday. The Bloomberg Dollar Spot Index remained steady. Silver held near its recent levels, below Monday’s 14-year peak, while platinum slipped slightly and palladium edged higher.

Gold has surged more than 40% this year, outperforming major assets such as the S&P 500, and has recently surpassed its inflation-adjusted peak set in 1980. Ongoing trade and geopolitical uncertainties, combined with central bank purchases and inflows into exchange-traded funds (ETFs), have been key drivers of the rally.

Goldman Sachs forecasts that gold could reach US$5,000 per ounce if just 1% of privately held government bonds were redirected into precious metals.