Gold prices rose in the European market on Tuesday, extending gains for the fourth consecutive session and continuing to break records, closing in on the $3,900 per ounce mark for the first time ever, set to post the biggest monthly gain in five years on the back of massive investment demand for the precious metal.
The current rally is supported by the continued decline of the US dollar against a basket of global currencies, pressured by concerns over a potential US government shutdown and expectations that the Federal Reserve will cut interest rates twice before the end of this year.
To reassess those expectations, markets are awaiting a series of highly important US labor market reports this week, which the Fed relies heavily on in shaping its monetary policy.
Price Overview
• Gold prices today: Spot gold rose 1.0% to $3,871.78 per ounce, the highest level ever, from an opening price of $3,833.30, with a session low of $3,825.36.
• At Monday’s settlement, gold gained 1.95% in its third straight daily increase, driven by fears of a US government shutdown.
Monthly Performance
During September trading, which officially ends at today’s settlement, gold prices are up about 12.3%, on track for a second consecutive monthly gain and the biggest monthly rise since August 2011.
US Dollar
The dollar index fell 0.25% on Tuesday, extending losses for a third session in a row to its lowest level in a week, reflecting continued weakness in the US currency against its global peers.
Dollar weakness stems from concerns over a looming government shutdown, along with strong expectations that the Fed will deliver interest rate cuts in October and December.
US Interest Rates
• In its September meeting, the Fed delivered its first rate cut since December 2024, lowering rates by 25 basis points, and signaled openness to further easing.
• The Fed’s median projections point to an additional 50 basis points of cuts in 2025.
• Officials also anticipate one 25 basis point cut in 2026, with a similar move in 2027.
• According to the CME FedWatch Tool, markets currently price a 90% probability of a 25 basis point cut in October, with a 10% chance of rates staying unchanged.
• To recalibrate those October expectations, markets await several key US labor reports this week: job openings (Tuesday), private payrolls (Wednesday), weekly jobless claims (Thursday), and the September nonfarm payrolls report (Friday).
Gold Outlook
Tim Waterer, Chief Market Analyst at KCM Trade, said: “The looming US government shutdown is adding uncertainty to markets, accelerating gold’s gains.”
He added: “The $4,000 level now looks like a realistic year-end target for gold, with market dynamics such as lower interest rates and ongoing geopolitical tensions continuing to support the precious metal.”
SPDR Gold Trust
Holdings in SPDR Gold Trust, the world’s largest gold-backed ETF, rose by 6.01 metric tons on Monday, marking a second consecutive daily increase, lifting the total to 1,011.73 metric tons – the highest since July 15, 2022.
