Gold hits all-time high on safe-haven demand, Fed rate cut bets

Gold hit a record high on Tuesday as there were no signs of a reprieve from an impasse between the two houses of the U.S. Congress that has led to a government shutdown, while near-certain bets of a US rate cut this month also lent support.

Spot gold was up 0.1% at $3,962.63 per ounce by 0626 GMT, after hitting an all-time high of $3,977.19 earlier in the session. U.S. gold futures for December delivery gained 0.2% to $3,985.30.

"The (chances of) October and December cuts are still skewing above the 80% mark, so that's actually supporting gold prices and also this government shutdown as well, given there is still no resolution between the two sides of the US Congress," OANDA senior market analyst Kelvin Wong said.

Kansas City Federal Reserve Bank President Jeff Schmid signalled he is disinclined to cut interest rates further, saying the Fed should stay focused on the danger of too-high inflation as opposed to apparent job market weakness.

— Gold scales all-time high of $3,977.19/oz

— 93% chance of Fed rate cut in Oct - CME FedWatch tool

— Fed's Schmid says disinclined to cut interest rates

Markets, however, are still pricing in additional 25 basis-point rate cuts in both October and December, with probabilities of 93% and 82%, respectively, according to the CME FedWatch tool.

Non-yielding gold thrives in a low interest rate environment and during economic uncertainties.

Gold has climbed 51% so far this year on strong central bank buying, increased demand for gold-backed exchange-traded funds, a weaker dollar and growing interest from retail investors seeking to hedge amid rising trade and geopolitical tensions.

Goldman Sachs on Monday raised its December 2026 gold price forecast to $4,900 per ounce from $4,300, citing strong Western exchange-traded fund inflows and central bank buying.

China's central bank added gold to its reserves in September for the eleventh straight month, data from the People's Bank of China showed.

Elsewhere, spot silver was steady at $48.49 per ounce, platinum fell 0.1% to $1,624.11 and palladium rose 0.8% to $1,329.63.

Reuters