Gold hits new high above $3,600 as market bets on US rate cut

Gold in the spot market surpassed the $3,600 per ounce mark on Monday, September 8, 2025, following US employment data that sharply decelerated in August, reinforcing expectations that the Federal Reserve will cut interest rates at its next week’s meeting. The movement occurred primarily in global commodity markets, with the precious metal driven by a weakening US dollar and falling yields on ten-year Treasury notes, which neared five-month lows. Analysts highlight that the non-farm payroll report, released the previous Friday, showed only 88,000 jobs created, well below the projected 160,000, raising the unemployment rate to 4.3%. This dynamic, combined with continued purchases by central banks like China’s, which maintained acquisitions for the tenth consecutive month, explains this surge, representing a roughly 38% gain for the year so far. December futures contracts also advanced, trading around $3,670.80, signaling optimism for even higher levels in the short term.

The gold rally reflects a growing search for safe-haven assets amid global economic uncertainties, including trade tensions and stock market volatility. Investors adjusted their positions, seeing recent data as a clear signal that the Fed will prioritize employment support over immediate inflation control. The CME FedWatch tool now prices a 90% probability of a 25-basis-point rate cut in September, with a 10% chance of a more aggressive 50-basis-point reduction. This expectation gained traction after the weak payroll report, which included downward revisions of 95,000 jobs for March and April. Meanwhile, China’s central bank reported stable gold reserves in August, but the year’s accumulated volume reinforces the trend of diversifying international reserves away from the dollar.

Persistent weakness in the US labor market, evidenced by slower wage growth and hiring, creates a favorable environment for gold, which historically benefits from expansionary monetary policies. Strategists note that brief price pullbacks may be seen as buying opportunities, especially with upcoming inflation indicators like the PPI on Wednesday and CPI on Thursday. These reports will be critical to confirm whether consumer inflation continues to moderate, allowing the Fed to proceed with cuts through early 2026. Year-to-date in 2025, gold has outperformed its 27% gains from 2024, driven not only by a softer dollar but also by dovish monetary settings in various economies and rising geopolitical uncertainty.

Recent movements in the gold market

Gold prices started the week strongly, breaking through technical barriers that had held since April when the metal first hit $3,500. This current high reflects a mix of macroeconomic factors, with the dollar index (DXY) retreating to around 102 points, the lowest in months. Global central banks contributed to this rise, with record purchases in the first half of 2025 totaling over 500 tons, according to data from specialized institutions. China, the largest buyer, added 20 tons in August, raising its reserves to levels not seen since 2015.

• December futures contracts rose 1.2% in the session, closing at $3,670.80, with above-average trading volume of 115,000 lots.
• Spot gold gained 0.8% on the day, testing resistances at $3,620 before consolidating above $3,600.
• US gold ETFs recorded net inflows of $1.2 billion last week, the highest since March.
• Silver, a correlated metal, rose 1.5% to $32.50 per ounce, widening the spread between precious metals.

This dynamic suggests sustained upward momentum, though analysts warn of potential corrections if inflation data surprises to the upside. August’s report showed core CPI rising 0.3% monthly, in line with expectations, but components like energy fell 1.1%, easing pressures. In the short term, projections indicate gold could target $3,700 if the dollar continues to weaken, with support at $3,500 in case of profit-taking.

Impact of employment data on gold’s trajectory

August’s jobs report exposed a notable slowdown in the US labor market, with job growth dropping to levels last seen in 2021. This shifted the balance between the Fed’s dual mandates—maximum employment and price stability—toward actions supporting growth. The unemployment rate at 4.3% marks the highest since November 2021, while wage growth moderated to 3.8% annually, below the expected 4%. These figures, revised downward by 95,000 jobs for the prior two months, signal a growing risk of economic slowdown, historically boosting gold as a recession hedge.

Precious metals analysts emphasize that this weakness supports gold’s appeal, especially with Treasury yields declining. The ten-year yield fell to 3.85%, near five-month lows, reducing the opportunity cost of holding non-yielding gold. Comparatively, in previous Fed rate-cut cycles, like 2019, gold rose 18% in six months. For 2025, projections suggest an average annual price of $3,500, with peaks at $3,800 if cuts materialize as expected.

• Job creation: 88,000 in August, against 160,000 projected and 206,000 in July.
• Unemployment rate: 4.3%, up 0.2 percentage points from July.
• Wage growth: 3.8% annually, the lowest in two years, easing inflation fears.
• Revisions: -95,000 jobs in March and April, adjusting totals downward.
• DXY impact: 0.5% drop post-payroll, benefiting dollar-denominated commodities.

These indicators reinforce the view that the Fed will adopt a dovish stance, with projected cuts of 100 basis points by year-end, per market expectations. However, if next week’s inflation data shows resilience, gold could face selling pressure, with technical support at $3,450.

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Central bank demand and global accumulation

Emerging market central banks are leading gold demand in 2025, with total purchases exceeding 600 tons in the first eight months, a record since tracking began in 2000. China extended its buying streak to the tenth month in August, adding 18 tons, totaling 2,300 tons for the year. This diversification strategy reflects concerns about dollar stability amid rising US fiscal deficits and renewed trade tensions. Other players, like the Bank of Thailand and the Reserve Bank of India, reported additions of 15 and 25 tons, respectively, raising gold’s share in global reserves to 12%.

This accumulation supports prices at elevated levels, offsetting moderate industrial demand. Global gold production is expected to reach 3,600 tons in 2025, stable from 2024, but with extraction costs rising 5% due to input inflation. BRICS nations, accounting for 40% of purchases, see gold as an alternative to the dollar in bilateral trade, enhancing its geopolitical role.

• China: +18 tons in August, total reserves at 2,262 tons.
• India: +25 tons in the semester, hedging against rupee volatility.
• Turkey: +12 tons, driven by regional instability.
• Poland: Plan to expand reserves by 30%, adding 50 tons by 2026.
• Russia: Maintaining 2,300 tons despite Western sanctions.

Strong institutional demand mitigates correction risks, with analysts forecasting gold reaching $3,730 in the quarter if purchases continue at this pace. However, a slowdown in Asia could cap gains, especially if China’s economy shows recovery signs.

Short-term outlook for the precious metal

Analysts project gold could extend its rally to $3,700 in the short term, with pullbacks seen as entry points for institutional investors. Continued weakness in US economic data, including the ISM services index at 52.5 points in August, reinforces this view. Falling Treasury yields and a dollar pressured by trade deficits enhance the metal’s appeal. However, positive inflation surprises could pause the rally, with prices testing supports at $3,550.

The tokenized gold market, valued at $2.5 billion, reflects growing interest in gold-backed digital assets, easing access for smaller investors. Platforms like Kinesis report 10% inflows monthly, signaling a blend of traditional and crypto finance.

• Upside targets: $3,700-3,730, with 1-2 week momentum.
• Supports: $3,550 and $3,450, Fibonacci levels.
• Expected volatility: Rising with CPI on Thursday, RSI at 65 on the daily chart.
• DXY correlation: Inverse at -0.85, amplifying dollar movements.
• ETF demand: +$1.5 billion projected for September.

These projections assume gradual Fed cuts, with gold benefiting from a moderate-risk environment. Sustained Asian demand and relative geopolitical stability support optimism, though volatility persists.