Gold price hits new record as hopes of more Fed rate cuts spur demand

Gold (GC=F)

Gold prices surged to a record high on Monday, as investors flocked to the precious metal following last week’s US interest rate cut and the Federal Reserve’s signalling of potential further easing in monetary policy.

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At the time of writing, gold futures had gained 1.1%, reaching $3,745.90 per ounce, while the spot price rose 0.6% to $3,709.41 per troy ounce, after briefly hitting a new record of $3,721.08 earlier in the session.

Over the past month, the precious metal has risen by 10%, bolstered by growing expectations that the Fed will implement more interest rate cuts before the end of the year.

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"Gold is finding its feet again today, with traders focusing on upside price potential between now and year-end fuelled by projected further rate cuts from the Fed," said KCM Trade chief market analyst Tim Waterer, adding that sustained central bank buying also continues to support gold's momentum.

Looking ahead, the US core Personal Consumption Expenditures (PCE) price index, the Fed's preferred measure of inflation, is due for release on Friday. Along with speeches from at least a dozen Fed officials, including chairman Jerome Powell on Tuesday, the data could provide further clues as to the central bank’s monetary policy direction.

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In addition to US economic factors, geopolitical uncertainty, rising government debts, and persistent central bank buying have helped push gold prices up by 40% over the past year.

Rick Kanda, managing director at The Gold Bullion Company, explained how the strength of the US dollar influences global gold prices. "If the USD strengthens in comparison to the British pound, then UK gold prices will rise, and the US will see gold prices fall, and vice versa if the USD weakens," he said.

In 2025, the dollar depreciated by 11%, while US gold prices rose by over 25%. UK gold prices followed suit, rising 14% in the first half of the year and 11% more since July. Kanda attributed the rise to expectations of US interest rate cuts but warned that uncertainties around international tariffs and trade could cause fluctuations.

“If these policies don’t see the GBP depreciate, it could be a good opportunity for Brits to invest in gold."

Oil (BZ=F, CL=F)

Oil prices were supported on Monday by escalating geopolitical tensions in Europe and the Middle East, although concerns over increased supply and the impact of trade tariffs on global fuel demand capped further gains.

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Brent crude futures advanced 0.5% to trade at $67.02 per barrel at the time of writing, while West Texas Intermediate futures climbed by the same margin to $63.01 a barrel.

"Reports over the weekend that Russia was threatening the Polish border has provided traders with a timely reminder of the ongoing risks to European energy security from the north east," Michael McCarthy, CEO of investment platform Moomoo Australia and New Zealand, told Reuters.

Investors are closely monitoring developments in the European Union and any potential steps to tighten sanctions against Russia’s energy sector. Any such measures are expected to disrupt global oil flows and could push prices to new highs.

In the Middle East, tensions escalated after four Western nations recognised Palestine as a state, prompting a furious response from Israel and further heightening concerns in the volatile oil-producing region.

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Despite the geopolitical risks, the market remains wary of the global supply-demand balance, with the uncertainty over trade tariffs and their impact on fuel demand continuing to weigh on prices.

"Rising inventories over the past six months have also confirmed that supply has been outpacing demand," Tim Evans said in the newsletter Evans on Energy.

"Increased strategic reserves accumulated by China and the US have helped soak up the surplus, but the added inventories still reduce the near-term upside potential for prices and leave the downside open."

Pound (GBPUSD=X, GBPEUR=X)

The pound was steady against its major peers on Monday morning, though its gains were capped by concerns that chancellor Rachel Reeves may struggle to keep the government’s budget under control.

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Sterling was flat against the greenback, trading at $1.3479, and muted against the euro, trading at €1.1465.

The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was muted at 97.66

Recent figures for August showed that public sector net borrowing had hit £18bn, the highest for the month in five years. Economists had expected government borrowing to be much lower, at £12.8bn. Analysts warned that this could worsen the UK’s debt burden and increase fiscal risks, which may exert some selling pressure on the pound.

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Traders are looking ahead to remarks from Federal Reserve officials later on Monday, which could provide more insights into the US interest rate outlook. Any dovish comments from the Fed could weigh on the US dollar, potentially creating a tailwind for the GBP/USD pair.

In equities, the FTSE 100 (^FTSE) was lower on Monday morning, down 0.1% to trade at 9,208 points. For more details on market movements, check our live coverage here.

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