Gold hits fresh record as Fed cut bets dominate
The precious metal surged above $3,500 an ounce for the first time as expectations of September rate cuts drive safe-haven demand and weaken the dollar. Click here to enter text.
Gold hits record high
Gold surged to a new all-time high today, climbing above $3,500.00 an ounce, as expectations of imminent Federal Reserve (Fed) easing pushed investors further into the haven asset.
This milestone represents a significant psychological breakthrough for the precious metal, demonstrating the continued appeal of gold during periods of monetary policy uncertainty and economic transition.
The break through this round-number level has attracted momentum buyers and technical traders, creating additional upward pressure beyond the fundamental drivers supporting the precious metal's advance.
A sustained move above $3,500.00 would validate the bullish case for gold that has been building throughout the year as investors seek alternatives to traditional financial assets.
Federal Reserve policy expectations drive momentum
The market's focus has squarely shifted to the September Federal Open Market Committee (FOMC) meeting, with futures implying an almost 90% chance of a 25-basis-point rate cut. Last week's softer inflation prints and signs of cooling momentum in some economic indicators have only strengthened the belief that policymakers are preparing to loosen policy.
For traders, this has meant lower Treasury yields and a weaker US dollar - two key ingredients for bullion's rally. The inverse relationship between interest rates and gold prices has reasserted itself as the opportunity cost of holding non-yielding assets diminishes.
The high probability of rate cuts reflects market confidence that the Federal Reserve (Fed) will prioritise economic growth support over inflation concerns, creating a more accommodative monetary environment.
Safe-haven rotation gains momentum
Beyond rate expectations, the renewed surge in demand for traditional safe havens reflects ongoing concerns about global growth and geopolitical risks.
With equity markets showing tentative signs of fatigue after months of gains, and are entering the month of September, historically the worst performing month for stock markets, investors appear increasingly inclined to rotate into assets that offer perceived stability.
S&P 500 monthly performance since 1950
Gold's lack of yield, normally a disadvantage compared to interest-bearing assets, has become far less relevant as the prospect of falling US interest rates erodes the appeal of cash and bonds.
This rotation into safe-haven assets suggests that investors are becoming more risk-averse despite continued strength in equity markets, potentially signalling concerns about economic sustainability.
The precious metal's role as a portfolio diversifier becomes particularly valuable during periods of market uncertainty, providing protection against currency debasement and financial market volatility.
Technical factors support continued advance
The break through $3,500.00 marks a significant psychological milestone.
Momentum buying has accelerated as traders chase the move, with positioning data showing renewed inflows into gold-backed exchange-traded funds (ETFs).
For many market participants, today's rally confirms the broader uptrend that has been building since early summer, and sets the stage for potential further gains if this week's labour market data disappoints.
Technical analysis suggests that a break on a daily chart closing basis above the $3,500.00 psychological resistance level could open the door to further advances, with minimal overhead resistance until significantly higher levels such as the next psychological marker at $4,000.00.
Gold monthly candlestick chart
On the way up sits a 161.8% Fibonacci extension target at $3,746.85. It is measured from the August 1999 low at $252.10 to the September 2011 peak at $1,921.07 and projected higher from the December 2015 low at $1,046.46.
Gold daily candlestick chart
In the very short-term it is likely that the gold price may struggle around the $3,500.00 mark, just as it did in April. As long as the mid-August low at $3,311.56 isn’t being slipped through, the medium-term uptrend is deemed to stay intact.
The combination of fundamental drivers and technical momentum creates conditions where gold could continue advancing if the supportive factors remain in place.
Key economic data could determine direction
Friday's non-farm payrolls (NFPs) report now looms as the key test for the gold market. A weaker-than-expected jobs number could cement expectations of a deeper rate cut cycle, providing fresh fuel for bullion's advance.
Conversely, any upside surprise in employment data might trigger a temporary pullback, though with momentum now firmly behind gold, dips are likely to be viewed as opportunities rather than turning points.
The employment data will be crucial for determining whether the Fed follows through on market expectations or whether economic resilience might delay or reduce the scope of monetary policy easing.
Gold's sensitivity to economic data highlights how closely the precious metal's performance is tied to monetary policy expectations and broader economic conditions.
Global monetary policy trends support outlook
Beyond Federal Reserve (Fed) policy, central bank actions worldwide are creating a supportive environment for gold investment through coordinated monetary easing and currency debasement concerns.
Many central banks have been net buyers of gold in recent years, especially that of China, adding to official reserves as part of diversification strategies away from US dollar-dominated holdings.
This institutional demand provides a structural support level for gold prices, complementing the investment demand driven by monetary policy expectations and safe-haven seeking.
The combination of official sector buying and investment demand creates multiple sources of support that could sustain higher gold prices even if some individual factors moderate.
Investment approaches for gold exposure
For investors looking to gain exposure to gold's rally or hedge against monetary policy risks, several approaches are available through IG's trading and investment platforms.
- Research gold market dynamics, monetary policy implications, and safe-haven investment strategies to understand the precious metal's role in portfolio construction.
- Consider how gold exposure fits within your overall investment strategy and risk management approach.
- Open an account with IG by visiting our website and completing the application process.
- Access gold markets through our platform, including spot gold, gold futures, and gold-backed securities.
- Implement appropriate position sizing and risk management given gold's potential volatility around key economic data releases.
Spread betting and CFD trading provide flexible approaches for gaining exposure to gold price movements while maintaining precise risk control.
For those seeking longer-term precious metals exposure, investment in gold-backed ETFs or gold mining companies offers alternative approaches to direct commodity exposure.
The combination of Fed policy expectations, safe-haven demand, and technical momentum has created ideal conditions for gold's advance to record levels. Whether this momentum can be sustained will depend on economic data confirmation and the actual pace of monetary policy changes, but the current environment appears highly supportive for continued precious metal strength.
Important to know
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Connect with us
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
Professional clients trading spread bets and CFDs can lose more than they deposit.
Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. They’re not suitable for most investors. Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment.
Trading stocks and shares ‘on margin’ within a US options and futures account – meaning that you only finance part of the cost of acquiring a position in a security – carries additional risks over buying securities on a fully funded basis and may result in losses exceeding your original investment. Trading on margin will also result in additional costs to you as the investor and any securities purchased using margin may be held as collateral by the lender, restricting both your rights as shareholder, and your ability to use the securities until the margin trade is closed. You should familiarise yourself with these risks before trading on margin.
The value of shares, ETFs and other ETPs bought through a share dealing account, a US options and futures account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.
IG is a trading name of IG Trading and Investments Ltd (a company registered in England and Wales under number 11628764), IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd (Register number 195355), IG Trading and Investments Ltd (Register Number 944492) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.
The information on this site isn’t directed at residents of the United States, Belgium or any particular country outside the UK and isn’t intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.