Gold futures surged to a record high of $3,557 per troy ounce on Monday, boosted by rising odds of a rate cut during the September Federal Open Market Committee (FOMC) meeting.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Gold futures are now up by about 33% year-to-date, outperforming both the S&P 500 (SPX) and the Nasdaq 100 (NDX). Meanwhile, the odds of a 25 bps rate cut this month rose to 89.6% compared to 86.4% yesterday and 83.7% a week ago.
Rate Cut Odds and Trade Uncertainty Drive Gold Higher
The price of gold and the federal funds rate generally hold an inverse relationship. That’s because the precious metal doesn’t pay out interest, meaning that it becomes more attractive as an investment when interest rates are lower.
Due to its status as a safe-haven asset, gold also tends to rise in times of geopolitical uncertainty. This morning, President Trump characterized the U.S.-India trade relationship as a “one sided disaster” and a “one sided relationship.” The statement comes after Trump doubled the tariff on imported Indian goods to 50% as a result of India buying oil from Russia, which he says indirectly finances Russia’s attacks against Ukraine.
Stay ahead of macro events with our up-to-the-minute Economic Calendar — filter by impact, country, and more.