Sept. 1 – Silver jumped above $40 per ounce for the first time in over ten years, while gold reached a more than four-month high on Monday as rising wagers for a U.S. Federal Reserve interest rate decrease this month boosted bullion’s appeal.
By 0641 GMT, spot gold had increased 1.2% to $3,486.86 an ounce, its highest level since April 23. December delivery U.S. gold futures increased 1.1% to $3,554.60.
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Fed’s Dovish Tone Supports Rate Cut Expectations
“Dovish comments from San Francisco Fed President Mary Daly helped traders look past a higher core PCE read on Friday, and kept the door open for a 25-basis-point rate cut this month,” Matt Simpson, a senior analyst with the City Index, stated.
According to Simpson, a U.S. appeals court has also said that the majority of U.S. President Donald Trump’s tariffs are unlawful, which has further devalued the dollar and driven gold to a four-month high.
Inflation Data Reinforces Monetary Policy Speculation
As expected, the U.S. PCE price index increased by 2.6% year over year and 0.2% month over month, according to data.
Given the dangers to the labor market, Daly reaffirmed her support for a rate cut in a social media statement on Friday.
Generally speaking, non-yielding gold does well when interest rates are low.
Trade Uncertainty Continues Despite Court Ruling
Although a U.S. appeals court ruled that the majority of Trump’s tariffs are unlawful, U.S. Trade Representative Jamieson Greer stated on Sunday that the Trump administration is still in negotiations with trading partners.
Silver Reaches Highest Level Since 2011
At $40.56 an ounce, spot silver surged 2.2%, reaching its highest level since September 2011.
“The U.S. bank holiday is contributing to thinner liquidity, which is also exacerbating some of the moves in gold and silver,” Tim Waterer, chief market analyst at KCM Trade, put it.
“Silver is making a move higher in response to expectations of lower U.S. rates, while a tight supply market is helping to maintain an upward bias.”
