Gold Rises Toward Record as ETFs Expand in Run-Up to Fed Meeting

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Gold Rises Toward Record as ETFs Expand in Run-Up to Fed Meeting.

commodities :: 2025-09-12 :: source - bloomberg

By Yihui Xie and Jack Ryan

(Bloomberg) -- Gold headed for a fourth weekly gain on expectations the Federal Reserve is poised to lower US interest rates, with prices aided by inflows into bullion-backed exchange traded funds.

The precious metal traded near $3,650 an ounce, up about 1.8% this week, after setting a record in Tuesday’s session. Silver, which can move in tandem, topped $42 an ounce to hit the highest since 2011.

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On Thursday, data showed US consumer prices rose as expected in August, handing Fed policymakers the leeway to reduce borrowing costs after a string of weak labor-market prints.

Traders have priced in at least one quarter-point cut at the Fed’s meeting next week, and possibly two more by the end of the year. The US dollar and 10-year Treasury yields have lost ground this week. Lower borrowing costs, falling yields and a weaker greenback typically benefit gold.

Gold has rallied by nearly 40% this year, making it one of the best performing commodities, and outpacing other market gauges including the S&P 500 Index. The surge has been supported by central-bank buying, geopolitical uncertainties and inflows into ETFs. In addition to setting a nominal record this week, gold also surpassed its inflation-adjusted peak set more than 45 years ago.

Bullion-backed ETFs have expanded by almost 17 tons so far this week, according to data compiled by Bloomberg.

UBS Group AG raised its price target for gold to $3,800 an ounce by the end of the year from $3,500, citing elevated gold ETF buying, lower rates and dollar weakness. The bank sees bullion at $3,900 by the mid-2026.

“As gold’s negative correlation with the USD remains elevated, the greenback’s ongoing depreciation should boost investment demand, with participants using the metal as a hedge,” UBS analysts including Wayne Gordon wrote in a note. “US President Donald Trump’s desire for lower policy rates also lifts gold’s appeal.”

Gold has also been aided by Trump’s attempt to extend his influence over the US central bank. On Thursday, he asked an appeals court to pause a lower-court decision that blocked his bid to oust Fed Governor Lisa Cook for alleged mortgage fraud. The administration asked for a ruling by Monday, one day before Fed policymakers start their September meeting.

Prices traded 0.4% higher at $3,650.08 an ounce at 11:48 a.m. in London. The Bloomberg Dollar Spot Index gained 0.1%. Silver rose by 1.8% to $42.29 an ounce. Palladium headed for a weekly gain of almost 9%, while platinum rose toward $1,400 an ounce.

In Asia, Thai households are poised to buy more gold for a fifth year, as a rally in the local currency makes bullion more affordable. That’s complicating efforts by the central bank to curb the metal’s influence on the baht.