Gold Prices Hit New Record Above $3,650 as Rate Cut Bets and Political Turmoil Drive Demand
Gold prices surged to a fresh all-time high in Asian trading on Tuesday, extending strong gains from recent sessions. The rally was fueled by growing expectations of a Federal Reserve interest rate cut next week and additional support from a weakening U.S. dollar.
Safe-haven demand for gold also spiked amid rising global political tensions. In France, Prime Minister Francois Bayrou stepped down after losing a confidence vote in the National Assembly, while in Japan, Prime Minister Shigeru Ishiba announced his resignation, adding to uncertainty. Meanwhile, prospects of fresh U.S. sanctions on Russia following Moscow’s deadly strike on Ukraine over the weekend further boosted bullion’s appeal.
As of 00:44 ET (04:44 GMT), spot gold climbed 0.6% to a record $3,656.70 per ounce, while December gold futures peaked at $3,695.25/oz.
Fed Rate Cut Expectations Fuel Gold’s Rally
Bullion prices have been on a strong upward trend since last week after data showed continued weakness in the U.S. labor market. Nonfarm payrolls for August revealed that the U.S. economy created almost no new jobs, reinforcing speculation that the Fed will move forward with a rate cut.
Markets are now pricing in a 92.4% probability of a 25 basis-point cut during the Fed’s September 16-17 meeting, with a smaller 7.6% chance of a larger 50-point cut, according to CME’s FedWatch tool.
Several Fed officials recently suggested the central bank is open to cutting rates if labor market weakness persists, though they remain cautious about inflation pressures—particularly those linked to President Donald Trump’s new trade tariffs. Investors are closely watching the upcoming U.S. inflation report for August, as many of Trump’s tariffs took effect last month and could add upward pressure to consumer prices.
Lower interest rates typically favor gold and other metals because they reduce the opportunity cost of holding non-yielding assets compared to government bonds.
Other Precious Metals Rise Alongside Gold
Precious metals broadly gained on Tuesday. Platinum futures rose 0.6% to $1,397.25/oz, while silver futures edged 0.2% higher to $41.30 an ounce, just below last week’s 14-year peak not seen since August 2011.
In industrial metals, benchmark copper futures on the London Metal Exchange rose 0.2% to $9,940.15 a ton. U.S. copper futures matched the gain, trading 0.2% higher at $4.58 a pound.
According to ING analysts, earlier U.S. tariffs shifted copper supply away from China toward the U.S. in the first half of the year. However, this trend may reverse in the coming months as President Trump has postponed plans for a 50% tariff on refined copper.
