Gold extends rally as Bessent pushes for steep US rate cuts
&imwidth=600&imheight=450&format=webp&quality=medium "Gold extends rally as Bessent pushes for steep US rate cuts")
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich. Photograph: (Reuters)
Gold extended its winning streak as dovish Fed rate cut bets, a weaker dollar, and geopolitical uncertainty lifted safe-haven demand.
Gold prices rose for a third straight session on Thursday, buoyed by growing bets that the US Federal Reserve will deliver interest rate cuts as early as next month. The momentum picked up after Treasury Secretary Scott Bessent urged the central bank to slash borrowing costs significantly.
As quoted by Bloomberg, spot gold was 0.5 per cent higher at $3,372.03 an ounce at 7:25 a.m. in Singapore, extending gains from the previous day. Bullion has now climbed close to $3,370 an ounce after Bessent suggested that the Fed’s benchmark rate should be at least 1.5 percentage points lower than its current level.
Lower interest rates and falling Treasury yields tend to support gold, which offers no interest, by reducing the opportunity cost of holding the metal. Yields retreated on Wednesday after Bessent’s remarks, amplifying demand for the safe-haven asset.
Market expectations shift sharply
The outlook for US monetary policy has changed dramatically in recent weeks. According to Bloomberg, markets had placed less than a 50 per cent chance on a September rate cut just last month. Now, traders see a quarter-point reduction as almost certain, with some betting on a larger half-point move.
Gold prices have surged 28 per cent so far in 2025, with the majority of gains concentrated in the first four months. Persistent geopolitical tensions, trade disputes, and strong central bank purchases have all underpinned demand.
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Dollar weakness and tariff confusion in focus
The Bloomberg Dollar Spot Index slipped 0.1 per cent on Thursday, further supporting gold by making it cheaper for holders of other currencies. Other precious metals, including silver, platinum and palladium, also edged higher.
Meanwhile, the market is still seeking clarity on whether US imports of gold bars will face tariffs. Confusion earlier this week pushed the premium for gold futures in New York above spot prices in London. President Donald Trump said on Monday that no such levy would be imposed, which helped align the two markets, though he did not elaborate further.
With interest rate expectations leaning dovishly, and political risk still elevated, gold’s upward momentum may find further fuel in the weeks ahead.
(With inputs from the agencies)