Gold prices surged to historic levels above $3,600 per ounce, driven by growing market confidence that the U.S. Federal Reserve will cut interest rates and by broader concerns over policy stability.

On Monday, spot gold climbed 1.3% to $3,634.25 by mid-afternoon, touching an all-time high of $3,646.29 earlier in the session.

U.S. gold futures for December delivery settled 0.7% higher at $3,677.40.

The rally followed weak U.S. non-farm payrolls data, which showed a sharp slowdown in August hiring and pushed the unemployment rate to 4.3%.

This reinforced expectations that the Fed will reduce rates at its upcoming meeting.

CME’s FedWatch tool indicated an 88% probability of a 0.25% cut in September and a 12% chance of a 0.50% reduction.

Lower interest rates tend to boost the appeal of gold, a non-yielding asset.

Political factors have added further momentum, with questions over the Federal Reserve’s independence and a declining dollar amplifying demand.

Since early 2025, the dollar has weakened significantly, making gold more attractive to global investors.

Strong central bank demand, particularly in Asia, has also supported the surge.

Analysts suggest gold could soon test levels between $3,700 and $3,730, with some forecasting a climb toward $4,000 by 2026 if geopolitical tensions and economic uncertainty persist.

Peter Grant, vice president and senior metals strategist at Zaner Metals, noted that any pullbacks in price are likely to be seen as buying opportunities, given the strength of current market fundamentals.