PRECIOUS-Gold hits record high above $3,900/oz on Fed rate cut bets, global uncertainty

By Anushree Mukherjee and John Biju

Oct 6 (Reuters) - Gold surged to an all-time high above $3,900 per ounce on Monday, buoyed by growing expectations of a Federal Reserve rate cut this month, as well as economic and political uncertainty in the U.S., France and Japan.

Spot gold XAU= was up 1.8% to $3,956.42 per ounce as of 11:04 am ET (1504 GMT), after hitting a high of $3,958.57 earlier in the session.

U.S. gold futures GCcv1 for December delivery rose 1.8% to $3,979.80 per ounce.

Political developments in France, rising Japanese yields amid inflation concerns and the ongoing U.S. government shutdown are all contributing to gold’s rally, said Marex analyst Edward Meir.[ MKTS/GLOB]

France’s new Prime Minister Sebastien Lecornu and his government resigned on Monday, hours after taking office, deepening the country’s political crisis.

The yen was under pressure after Japan’s ruling party picked fiscal and monetary dove Sanae Takaichi as its head on Saturday.

Meanwhile, the U.S. government shutdown entered its sixth day, with the White House threatening mass federal worker layoffs.

Gold has climbed 48% so far this year in a record run underpinned by expectations of Fed rate cuts, sustained central bank purchases, resilient safe-haven demand and broad dollar weakness. Spot gold prices broke the $3,000/oz level for the first time in March and $3,800 in late September.

"The fact that we're so close to $4,000/oz also suggests that some of the funds might be trying to push it up to get to that mark," Meir added.

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

"We see both fundamental and momentum-based reasons for gold to rally further, and now expect bullion to reach $4,200/oz by the end of this year," UBS said in a note.

Spot silver XAG= climbed 1.6% to $48.72 per ounce, hitting its highest level in more than 14 years. Platinum XPT= rose 2.2% to $1,639.59 and palladium XPD= gained 4% to $1,311.43.