Gold Moves Higher As Rate Cut Bets Support Yellow Metal

(RTTNews) - Gold prices gained modestly on Friday, reaching a new record high as expectations of interest rate cuts by the US central bank keep increasing day after day amid geopolitical tensions in the European Union and Middle East.

Front Month Comex Gold for September delivery rose by $12.50 (or 0.34%) to $3,649.40 per troy ounce today. Notably, this is a new record high for gold. Gold gained $36.20 (or 1.00%) per troy ounce this week.

Front Month Comex Silver for September delivery jumped by $69.00 cents (or 1.65%) to $42.387 per troy ounce today. Silver gained $1.3130 (or 3.20%) per troy ounce this week.

On the economic front, poor employment and relatively subdued inflation readings have made the pitch easy for the US Federal Reserve to ease monetary restrictions.

Reacting to the PPI data released on September 10 on his social media platform Truth Social, US President Donald Trump renewed his calls for rate cuts immediately. Trump criticized US Fed Chair Jerome Powell as a "total disaster" for not lowering rates in a big way, sooner.

The US PPI edged down by 0.1% month-on-month in August and rose 2.6% year-on-year, indicating an easing of inflationary pressures. However, core PPI increased 0.3% month-on-month and 2.8% year-on-year, suggesting bottom-line inflation persists.

Trump's remarks come at a time when the US Federal Reserve's monetary policy meeting is scheduled for September 16 and 17, next week.

According to CME Group's FedWatch Tool, investors are betting on a 92.5% chance of a 25-basis-point interest rate cut and a slim 7.5% chance of a bigger 50-basis-point rate cut.

Though grappling with global economic uncertainty, despite inflation, the European Central Bank held its benchmark interest rate at 2%, citing the resilience of the domestic economy.

Unlike the US, the Bank of Japan is apparently set to keep its policy rate unchanged at 0.5% in its September 19 meeting. The nation is preparing for a new Prime Minister after the sudden resignation of Shigeru Ishiba.

While the Bank of England is expected to leave rates unchanged at its meeting on September 19, the Bank of Canada appears set to resume rate cuts from the current 2.75% after dismal jobs data.

On the geopolitical front, ruling out a meeting with Ukrainian president to end its war, Russia has been escalating its attacks on its neighbor, with Ukraine's retaliation ongoing.

In the Middle East, after conducting aerial strikes on Hamas leaders sheltering in Doha, Israeli PM Benjamin Netanyahu announced yesterday that there will be no Palestinian state and that the place belongs to Israel. Qatar's PM has vowed "deadly revenge."

The prevailing geopolitical tension in Europe and Middle East has triggered yellow metal buying by investors.

On the tariff front, as the US Supreme Court is set to hear arguments over Trump's "reciprocal tariffs" after a lower court deemed them "illegal," the legal process which may take months before a final verdict is delivered has caused a deadlock in the global trade scenario.

Gold reserves in China have now reached $253.8 billion. The central bank has purchased 21 Tonnes of gold so far in 2025.

In India, physical gold purchases have dropped due to the steep increase in prices despite approaching festival season.