On Tuesday (September 9), gold prices continued their record-breaking rally, buoyed by market expectations of an impending US interest rate cut in September. According to the CME FedWatch tool, traders believe the probability of a 25 basis point rate cut by the Federal Reserve in September is 92%. Traders currently place a 92% probability on a 25 basis point cut next week, with some even betting on a 50 basis point cut. This probability has increased from 88% last week, reflecting growing market concerns about a weakening labor market. Institutions such as Macquarie and Barclays have raised their forecasts for total Fed rate cuts by 2025 to over 100 basis points.



Data released last Friday showed a sharp slowdown in US job growth in August, further reinforcing expectations of a rate cut. Falling interest rates typically put downward pressure on the US dollar and bond yields, boosting the appeal of gold, which offers no interest. While the US dollar index has risen, it remains near a seven-week low. The benchmark 10-year US Treasury yield has also rebounded after hitting a five-month low earlier in the week. The US dollar index is currently trading at 97.69, down 0.03% from last week, while the 10-year Treasury yield has retreated to 4.07%. CNBC analyst Nikos Tzabouras noted that the mild July CPI reading (a 2.7% year-on-year increase, below the expected 2.8%) has raised the probability of a September rate cut to 97%.

This surge is driven not only by expectations for Federal Reserve policy but also by global geopolitical uncertainty and continued central bank gold purchases. According to the World Gold Council's 2025 Mid-Year Outlook, gold prices have risen 26% in the first half of the year, reaching over 40 new all-time highs, far outpacing other major asset classes. Gold is serving as an ideal hedge against stagnant inflation (stagflation), recession, and US policy risks, particularly amidst heightened trade uncertainty stemming from Trump's tariff policies.

Inflation data sets the tone for short-term trends, and institutions are optimistic about the future market

Investors are closely watching inflation data due this week for further clues about interest rate cuts ahead of the Federal Reserve's meeting next week. US Producer Price Index (PPI) data will be released on Wednesday, followed by Consumer Price Index (CPI) data on Thursday. Economists expect the PPI to rise 0.2% month-over-month and 3.3% year-over-year, while the CPI is expected to rise 0.2% month-over-month and 2.6% year-over-year. A lower-than-expected reading would reinforce the Fed's "gradual rate cut" approach. If this week's PPI data shows an annual increase below the expected 3.3%, it would further suppress the US dollar and support gold's gains. Capital.com analyst Kyle Reda emphasizes that if this week's PPI and CPI data confirm cooling inflation, the probability of a 50 basis point rate cut could rise to over 20%, pushing gold prices back towards the $3,600-3,800 range.

Oxford Economics warned that prices of tariff-related goods are rising rapidly, which may lead to higher-than-expected PPI and trigger concerns about a rebound in inflation, thereby temporarily suppressing gold; Kitco senior metals analyst Wyckoff said that low PPI will be "directly beneficial to gold, pushing prices towards $3,700."

Morgan Research predicts that the average price of gold will reach $3,675 in the fourth quarter of 2025 and rise to $4,000 in the second quarter of 2026, benefiting from the expected 900 tons of gold purchases by central banks (mainly from China and emerging markets); the optimistic view of John Ciampaglia, CEO of Sprott Asset Management, is supported by Standard Chartered Bank analyst Suki Cooper, who predicts that gold will enter a period of seasonal strength and set a new high before the end of the year.

“Even at $3,600 an ounce, we remain very bullish on gold — we think the market will continue to rally because we haven’t seen anything yet in terms of tariffs, trade relations, [and] geopolitics that could lead to a trend reversal,” said John Ciampaglia, CEO of Sprott Asset Management. “If any of those areas improve… I think the upward momentum in gold prices could pause.” Melek added: “If the U.S. economy weakens further, that essentially means we could see more inflows into non-traditional asset classes like gold as a hedge against potential downside risks.”