Gold climbs to fresh record on bets for Fed rate cuts

Gold surged to fresh record highs this week as investors pushed back expectations for U.S. interest rates, with spot bullion briefly topping the mid 3,600s an ounce and, on an inflation adjusted basis, eclipsing a more than 45 year peak. The rally accelerated after a softer than expected U.S. payrolls report and growing market bets that the Federal Reserve will cut rates later this year, lifting demand for nonyielding safe havens and sending real Treasury yields lower.

Traders and analysts cited a string of weaker U.S. data as the immediate catalyst. Payrolls and other labor indicators prompted swaps traders to price in almost three rate reductions by year end, while initial jobless claims rose to 263,000 for the week ending September 5, the highest four year level reported by the U.S. Department of Labor. The Bureau of Labor Statistics on Thursday also showed headline consumer inflation running at an annual 2.9 percent for August, supporting gold as an inflation hedge even as policymakers weigh the timing and size of cuts.

Market attention this week will remain on a slate of U.S. data and policy events that could either reinforce or check bullion’s advance. Investors are...