Boosted by strengthened expectations for Federal Reserve interest rate cuts within the year, gold and silver prices continued their robust upward trend on Monday. Gold futures closed sharply higher, setting a historic record, while silver futures reached a fresh 14-year peak. There are no clear technical or fundamental signals indicating the precious metals rally is nearing its top.
December gold futures rose by $29.40 to settle at $3,682.60 per ounce, and December silver futures gained $0.678 to $42.23 per ounce.
This rally was primarily triggered by last Friday’s U.S. nonfarm payrolls data, which fell significantly short of expectations: employment increased by just 22,000 in August, well below the forecast of 75,000 and July’s revised figure of 79,000. The unemployment rate edged up to 4.3%, the highest level since 2021. Markets interpreted this as a sign that the Fed will implement at least 75 basis points of rate cuts by year-end, with lower rates seen as beneficial for commodity demand prospects.
Precious metals analysis firm Heraeus pointed out that the U.S. dollar may be entering a prolonged path of depreciation, which would further boost gold prices. Analysts emphasized in their latest report that while a weaker dollar typically lifts gold, the peculiarity since 2016 has been gold’s rise even amid dollar strength. They argue that the reciprocal tariffs implemented by the Trump administration have significantly disrupted global trade patterns, and issues of tariffs and trade deficits are likely to persist even if the Supreme Court rules the actions exceeded authority.
Notably, central banks of many countries are continuously increasing gold reserves to reduce dollar exposure. Heraeus data shows global gold-backed ETF holdings grew by 397 tonnes (+12.3%) in the first half of the year, while bar and coin demand rose 6.4% year-on-year to 631 tonnes. Analysts stated that gold is becoming a more attractive hedge than the U.S. dollar against potential policy missteps by the U.S. government and central bank, noting that pressure from the Trump administration on Fed Chair Jerome Powell to cut rates heightens risks of monetary policy errors compounding fiscal mistakes.
The latest data from the World Gold Council (WGC) confirms strong inflows: global gold-backed ETFs attracted 53 tonnes ($5.5 billion) in August, more than double July’s 22.3 tonnes. North American funds led demand, with holdings up 37.1 tonnes ($4.1 billion), reflecting investor hedging against ongoing economic uncertainty and geopolitical risks.
The WGC stressed that beyond short-term speculative factors, low-cost gold-backed ETFs—often viewed as proxies for long-term strategic positioning—are having their best year on record, indicating investors are steadily building safe-haven allocations amid elevated risks.
European markets also showed strength, with funds in the UK, Switzerland, and Germany all recording significant inflows. German demand was supported by safe-haven appeal as Q2 GDP growth was revised lower, sparking recession fears. UK inflows were likely buoyed by stagflation concerns, with rebounding inflation and new U.S. tariffs clouding growth prospects. In a surprising turn, Asian-listed gold ETFs saw outflows in August, led by China, where improving equity market sentiment diverted capital away from gold.
Looking ahead, the WGC believes investment demand for gold remains well-supported as stagflation fears permeate global financial markets. Analysts noted that while anticipation of a Fed rate cut later this month is driving short-term demand, investors should watch the long end of the yield curve. They highlighted that gold’s sensitivity to U.S. real interest rates may increase as Western investors, particularly in the U.S., take a more active role. The current stickyness in long-term rates reflects growing stagflation concerns—a historically supportive environment for gold.
