Rising odds of US rate cut drive gold higher

Gold rallied to multi-week high on Thursday as market participants bet on potential US interest rate cuts and amid mounting risks around US tariffs, reviving the precious metal's safe-haven appeal.

Spot gold was quoted at USD3,381.81 an ounce on Thursday afternoon in London, up from USD3,365.43 at the same time on Wednesday. Silver rose to USD38.38 an ounce from USD37.84.

The yellow metal hit an intraday best of USD3,397 an ounce on Thursday.

The surge in gold was fueled by renewed safe-haven demand amid escalating trade tensions and growing expectations of a more dovish US monetary policy, DHF Capital's Bas Kooijman said.

US President Donald Trump said on Wednesday he planned to impose a 100% tariff on imported semiconductors, AFP reports.

The US president on Wednesday also announced 50% tariffs on Indian goods, punishing New Delhi for buying Russian crude oil, while new US levies came into force in dozens of countries.

Disappointing US economic data and signs of a cooling US labor market have reinforced expectations for a US Federal Reserve interest rate cut in September, DHF Capital's Kooijman said.

Markets currently expect three rate cuts by the end of the year, which could support bullion and help the market reach new highs, he said.

The US nonfarm payrolls grew by 73,000 in July, shy of the FXStreet-cited consensus of 110,000, data from Bureau of Labor Statistics showed on Friday last week. It is also short of the 147,000 initially reported for June.

ING analyst Ewa Manthey concurred, noting that potential US rate cuts could send gold to fresh highs, aided also by continued central bank buying and exchange-traded fund inflows.

Gold hit an all-time high record in April this year.

"There's something else boosting gold's safe-haven appeal, and that's what's actually going to happen to the Fed committee," Manthey said, pointing out: "Governor Adriana Kugler's resignation earlier this week could give President Trump the opportunity to appoint someone more in tune with his rate-cutting agenda."

Lower interest rates typically boost gold, which does not pay interest, the ING analyst said.

Another key driver of gold's rally, central bank buying, remains solid, she added and also highlighted gold-backed ETFs, which saw strong investment in the second quarter.

In other metals, platinum was priced at USD1,323.22 an ounce on Thursday, down from USD1,324.05 on Wednesday. Palladium was quoted at USD1,149.54 an ounce, down from USD1,164.94.

The copper price firmed to USD9,670.50 per tonne from USD9,643.00. Aluminium climbed to USD2,591.50 from USD2,568.00.