Gold prices hit fresh record as fed rate cut bets build

Gold rallies on fed easing bets and safe-haven demand

Gold surged to a new all-time high near $3,660 per ounce on Tuesday, extending this year’s remarkable run. The move comes as investors bet the Federal Reserve will deliver multiple rate cuts before year-end, with markets pricing in a 25-basis-point reduction at next week’s meeting and two more later in 2025.

The rally gained momentum after a weaker-than-expected US jobs report last Friday reinforced the view that the Fed is behind on its employment mandate. Bullion has now gained 39% year-to-date, supported by persistent US dollar weakness, robust central bank purchases, and heightened geopolitical and trade uncertainty.

Dollar index hovers near 7-week low

The US dollar index steadied at 97.4, close to its weakest level in nearly seven weeks, as signs of labor-market cooling pushed traders further toward dovish Fed bets. Economists expect upcoming benchmark revisions to show as many as 800,000 fewer jobs between April 2024 and March 2025, underscoring softer labor conditions.

All eyes now turn to inflation data, with the producer price index due Wednesday and the consumer price index Thursday. Futures markets see an 89% chance of a quarter-point cut next week, while a minority of participants are bracing for a larger 50-point move.

Euro pressured by French political turmoil

In Europe, the euro struggled after French Prime Minister François Bayrou lost a parliamentary confidence vote on Monday, ending a turbulent nine months in office. Bayrou is the fourth premier to exit under President Emmanuel Macron’s second term, exposing deep fractures in French politics.

The political uncertainty has weighed on euro sentiment, particularly against the Swiss franc, as investors seek safer alternatives amid ongoing instability.