Gold hit its highest level in more than four months on Monday, trading within about $23 of its all-time peak, supported by expectations of a Federal Reserve rate cut and a weaker US dollar, while silver broke above $40 an ounce for the first time since 2011.
Spot gold rose 0.9% to $3,477.56 an ounce by 9:37 a.m. Eastern Time (1337 GMT), its highest since April 22 when it touched the record of $3,500.05. December gold futures climbed by the same 0.9% to $3,547.70.
Spot silver jumped 2.6% to $40.69 an ounce, its highest since September 2011.
Markets in the United States were closed on Monday for the Labor Day holiday.
The US dollar index fell close to its lowest since July 28 against a basket of currencies, making dollar-priced bullion cheaper for overseas buyers.
Ole Hansen, head of commodity strategy at Saxo Bank, said: “Gold, and especially silver, extended strong gains from Friday, supported by sticky US inflation, weak consumer confidence, and rate-cut expectations … alongside concerns over Federal Reserve independence.”
Data on Friday showed the US Personal Consumption Expenditures (PCE) index rose 0.2% month-on-month and 2.6% year-on-year, in line with expectations.
Tim Waterer, chief market analyst at KCM Trade, said: “Silver is moving higher in response to rate cut expectations, while tight supply in the market is helping to reinforce the bullish trend.”
Mary Daly, president of the San Francisco Federal Reserve, last week reiterated her support for rate cuts in a social media post, citing risks tied to the labor market.
Giovanni Staunovo, analyst at UBS, said: “The market is looking ahead to Friday’s US jobs report, expecting it will allow the Fed to resume rate cuts starting in September, which supports investment demand.”
A Reuters poll forecasts nonfarm payrolls increased by about 78,000 in August, compared with 73,000 in July.
Gold, which yields no interest, typically performs well in a low-rate environment.
In a separate development, US Trade Representative Jamieson Greer said Sunday that President Donald Trump’s administration continues discussions with trade partners despite a US court ruling that deemed most tariffs illegal.
Among other precious metals, platinum rose 3.2% to $1,408.54, while palladium gained 1.9% to $1,129.70.
