Investors bet on more easing as inflation data looms
Gold prices surged to a new all-time high on Monday, fueled by growing investor confidence that the Federal Reserve will adopt a more dovish monetary policy stance. Spot gold rose 1.1% to $3,723.81 per ounce after touching a record $3,726.19 earlier in the session. U.S. gold futures for December delivery climbed 1.4% to $3,758.40.
The rally comes ahead of a series of scheduled remarks by Federal Reserve officials, including a closely watched speech from Chair Jerome Powell on Tuesday. Investors are looking for guidance on the pace and magnitude of additional rate cuts following the Fed’s decision last week to lower interest rates by 25 basis points — the first cut since December.
Focus shifts to key inflation data
Market participants are also awaiting the release of the U.S. core personal consumption expenditure (PCE) price index on Friday. This metric, closely followed by the Fed, is expected to offer clues about the central bank’s next moves. According to the CME FedWatch tool, markets now anticipate two more rate cuts this year — in October and December — with 93% and 81% probability, respectively.
UBS analyst Giovanni Staunovo said he expects gold to continue climbing this week, driven by dovish Fed commentary and data-dependent policy outlooks. “We continue to see further upside, with gold expected to reach $3,900 by mid-2026,” he noted.
Investor behavior shifts from East to West
While central bank purchases and strong Asian demand have traditionally supported gold, there is now a visible shift. Western investors are increasingly adding gold to their portfolios, as evidenced by growing inflows into gold-backed ETFs. “There is a shift in the factors supporting gold,” Staunovo explained. “Now we are also starting to see Western investors looking to add gold, driven by expectations of falling U.S. rates.”
Bullion has gained more than 40% so far in 2025, benefiting from geopolitical tensions, economic uncertainty, and global monetary easing. Spot gold may soon test resistance at $3,705 per ounce, and a decisive move above that level could push prices into the $3,719 to $3,739 range.
