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Gold (GC=F)

Gold prices surged to a fresh record on Monday morning, as softening US labour market data fuelled investor bets on a potential interest rate cut by the Federal Reserve later this month.

At the time of writing, gold futures dipped 0.4% to $3,639.10 per ounce, while the spot price of gold rose 0.6% to $3,611.08 a troy ounce, a record high.

"The main driver is US jobs data and the expectations now that the Fed could cut by 50 basis points in September. It's a marginal chance but a material shift from before the jobs figures," Capital.com financial market analyst Kyle Rodda said.

"Basically...all of the tailwinds are blowing for gold at the moment and notwithstanding an inflation shock this week, we will make a good test of $3,600."

The US economy added fewer jobs than expected in August, while the unemployment rate climbed to 4.3%, its highest level in nearly four years. The data added to signs that the labour market is cooling, reinforcing expectations that the Federal Reserve will ease monetary policy.

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Markets have now fully priced in a 25 basis point rate cut at the Fed’s meeting this month, with the CME FedWatch tool assigning an 8% probability to a larger 50bp move.

Expectations of looser monetary policy have bolstered demand for gold, which pays no yield and tends to benefit from lower interest rates. A weaker US dollar, another consequence of rate cut expectations, has also made the metal more attractive to buyers holding other currencies.

Investors will now turn their attention to Thursday’s US inflation report, which could provide further guidance on the Fed’s next steps.

Gold has climbed 45% so far this year, extending its 27% gain in 2024.