Gold extended gains to a new all-time high on Wednesday, powered by growing bets on a US interest rate cut, as the market weighs key economic indicators ahead of the Federal Reserve meeting in two weeks.

Spot gold rose another $30 to $3,560.85 an ounce, setting records on back-to-back days. US gold futures also peaked at $3,627.70 per ounce in New York.

The rally comes amid increased expectations that the Fed will cut rates later this month, especially after Chair Jerome Powell’s recent comments hinting at this outcome. A monetary easing would boost the appeal of gold, as the metal yields zero interest.

“Gold’s rally has room to run, with short to medium-term targets around $3,600 to $3,800, and the breakout pattern suggesting $4,000 could be within reach by late first quarter next year,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.

According to CME Group’s FedWatch tool, traders are pricing in a 92% chance of a 25-basis-point rate cut at the Fed’s September policy meeting.

In the short term, investors are keeping a close watch on a series of key US labor market indicators due this week, including job openings on Wednesday, weekly jobless claims and ADP employment on Thursday, and Friday’s non-farm payrolls report.

If the upcoming payrolls report comes in weaker than expected, that would strongly seal the case for a 25-basis-point rate cut in September, Grant added.

Concerns mount

On Wednesday, Fed Governor Christopher Waller repeated his call for a September rate cut, and said that how fast the central bank cuts after that will depend on what happens next in the economy.

Meanwhile, his peer Lisa Cook continues to legally challenge US President Donald Trump’s bid to remove her from office, in the latest episode of drama fueling uncertainty over the Fed’s independence.

“Growing concerns over the independence of the US central bank are further undermining trust in dollar-denominated assets and pushing investors toward gold,” traders at Heraeus Metals said.

In a note issued Wednesday, analysts at BMO Capital Markets also pointed to mounting concerns over sovereign debt levels in Western countries as another major factor driving a flight to safety in gold.

Source: MINING.COM