PRECIOUS-Gold rallies to record high above $3,600/oz as Fed rate cut bets firm

By Sherin Elizabeth Varghese

Sept 8 (Reuters) - Gold surged past the $3,600 an ounce level for the first time on Monday, hitting a fresh record high, as soft U.S. labor data reinforced expectations the U.S. Federal Reserve will cut interest rates next week.

Spot gold XAU= rose 1.5% to $3,639.43 per ounce, as of 12:00 p.m. EDT (16:00 GMT). Bullion hit a record high of $3,646.29.

U.S. gold futures GCcv1 for December delivery were up 0.7% to $3,680.30.

The yellow metal could extend its momentum toward $3,700–$3,730 in the near-term, with any brief pullbacks likely seen as buying opportunities, said Peter Grant, vice president and senior metals strategist at Zaner Metals.

"Continued labor market softness and expectations of ongoing Fed rate cuts into early 2026 could provide sustained support for bullion."

Friday's jobs report showed U.S. employment growth slowed sharply in August. Traders now see a 88% chance of a quarter-point rate cut at the Fed's September meeting, with around 12% chance of a larger 50-bps cut, according to the CME FedWatch tool.

Lower rates reduce the opportunity cost of holding non-yielding bullion.

Gold prices are up 38% so far this year, after gaining 27% in 2024, bolstered by dollar softness, strong central bank accumulation, dovish monetary settings and heightened global uncertainty.

China's central bank extended its gold-buying streak to a 10th straight month in August, official data showed on Sunday.

Benchmark 10-year U.S. Treasury yields, meanwhile, were near their lowest in five months. US/

Investors are now awaiting U.S. producer price data on Wednesday and consumer prices on Thursday for further clues on the Fed's policy path.

"If weakness in U.S. data continues, then so too should the ongoing bullish momentum in gold, as both the U.S. dollar and yields fall further," said Fawad Razaqzada, market analyst at City Index and FOREX.com. USD/

Conversely, "if the U.S. data shows surprise resilience in the coming weeks, then that might cause gold to correct from these elevated levels," Razaqzada added.

Elsewhere, spot silver XAG= rose 1.1% to $41.43 per ounce, touching its highest since September 2011. Platinum XPT= was up 0.8% to $1,383.95, and palladium XPD= gained 2.3% to $1,135.08.

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