Gold Prices Soar to All-Time Peak on Fed Rate Cut Expectations

(MENAFN) The price of gold surged to a historic peak on Friday, driven by weaker-than-expected August employment data, which spurred speculation of an interest rate cut by the Federal Reserve later this month.

Gold prices jumped by approximately 1.1%, reaching an all-time high of $3,586.89 per ounce by 12:35 GMT. Following the surge, the price settled around $3,574 at 12:48 GMT.

Earlier in the year, gold had already surpassed $3,500, reaching record levels amid rising global trade tensions, primarily due to U.S. tariffs. The precious metal has seen a remarkable gain of more than 30% in 2023.

Although gold prices had stabilized around $3,400 as trade tensions eased, renewed expectations of a rate cut by the Federal Reserve reignited demand for the metal, which is traditionally viewed as a safe haven asset.

The latest record high followed disappointing U.S. non-farm payrolls data. The U.S. economy added just 22,000 jobs in August, far below the anticipated 75,000. Additionally, the June jobs number was revised downward by 27,000, showing a loss of 13,000 jobs. The unemployment rate rose to 4.3% from 4.2% in July.

As the Federal Reserve prepares to announce its decision this month, speculation about a rate cut has intensified, driven in part by consistent criticism from U.S. President Donald Trump. Market analysts predict that the central bank will cut rates by 25 basis points in its September meeting, with two rate cuts anticipated by the end of the year.

In July, inflation fell short of expectations, and employment growth slowed, prompting the market's expectation of a 25 basis-point reduction in the Fed’s current policy rate, which stands between 4.25% and 4.5%.

At the Jackson Hole symposium in mid-August, Fed Chair Jerome Powell hinted at the possibility of easing, stating: "With policy in restrictive territory, the baseline outlook and shifting balance of risks may warrant adjusting our policy stance."

Furthermore, President Trump’s attempt to remove Fed Governor Lisa Cook has added to the uncertainty surrounding the central bank's independence, further boosting demand for gold as a safe haven.

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