Gold climbs to all-time high on Fed rate cut expectations; silver up 2.3%

Gold prices surged over 1 per cent to reach an all-time high on Thursday, driven by growing expectations of an interest rate cut by the Federal Reserve next week following U.S. data indicating a slowing economy.

As of 9:46 a.m. ET (1346 GMT), spot gold had risen 1.6 per cent to $2,551.19 per ounce, while U.S. gold futures climbed 1.4 per cent to $2,578.90.

“Gold found support near $2,510 in Comex and ₹71,900 in MCX today, with the dollar index remaining stable and interest rate cut expectations keeping buying interest at lower levels. This will likely keep prices range-bound until the policy announcement and subsequent projections. Gold prices are expected to hold support in the ₹71,750- ₹71,500 range, while resistance is seen in the ₹72,200- ₹72,350 zone. In Comex, gold faces resistance near the $2,525-$2,530 level,” Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

What's behind the rally?

The U.S. Labor Department reported that initial claims for state unemployment benefits rose by 2,000 to a seasonally adjusted total of 230,000.

In August, U.S. producer prices increased slightly more than anticipated due to higher service costs, though the overall trend aligns with easing inflation.

According to the CME FedWatch tool, markets are factoring in an 87 per cent probability of a 25-basis-point rate cut at the Federal Reserve's September 17-18 meeting, with a 13 per cent chance of a 50-basis-point reduction.

Gold, which yields no interest, tends to be a favored investment in environments with lower interest rates.

Palladium rose 2.7 per cent to $1,035.69 per ounce, reaching its highest level in over two months. Traders attributed the increase to a short-covering rally, following comments from Russian President Vladimir Putin on Wednesday suggesting Moscow might limit exports of uranium, titanium, and nickel in response to Western actions.

Meanwhile, spot silver climbed 2.3 per cent to $29.35, and platinum advanced 1.8 per cent to $968.48.