Gold price scores new record on US rate cut expectations

[Ben Graham]

Gold scored a new high as the prospect of US interest rate cuts and growing concerns over the Federal Reserve’s future lifted the appeal of precious metals.

Spot gold set an all-time record of $3,516.31 per ounce during the Asian trading hours, surpassing the previous high of $3,500.05 from April. By market open in New York, it had pulled back below the $3,500 mark, but still 0.8% higher on the day.

Gold futures also touched a new high, trading at roughly $3,580 an ounce in the US.

Gold has surpassed its highs from April.

The latest rally has been fueled by expectations that the US central bank will lower interest rates for the first time in nine months, after Fed Chair Jerome Powell cautiously opened the door to a monetary easing.

“Investors adding to gold allocations, especially as Fed rate cuts loom, are pushing prices higher,” UBS Group AG strategist Joni Teves wrote in a note. “Our base case is that gold continues to make new highs over the coming quarters.”

“A lower interest rate environment, softer economic data and continued elevated macro uncertainty and geopolitical risks boost gold’s role as a portfolio diversifier,” Teves added.

Suki Cooper, analyst at Standard Chartered Bank, gave a similar outlook: “The gold market is entering a seasonally strong period for consumption, coupled with expectations for a rate cut at the September Fed meeting.”

“We continue to expect further upside risk for gold prices and forecast gold to average $3,500/oz in Q3 2025 and $3,700/oz in Q4 2025,” she said, highlighting that more record prices are in the offing.

Growing US concerns

Gold has more than doubled over the past three years, as mounting geopolitical and economic risks fueled relentless buying of safe haven assets. In 2025 alone, bullion has gained more than 30% amid global trade tensions fueled by US President Donald Trump’s aggressive tariff policy.

Recently, Trump added a new layer of uncertainty with repeated attacks against the Fed that threatened the US central bank’s independence, causing alarm amongst investors.

Citi lifts gold short-term outlook on growth concerns

Markets are now waiting for a landmark ruling on whether Trump has legitimate grounds to fire Fed Governor Lisa Cook. If deemed legal, the move would allow the President to replace her with a dovish-leaning official.

“The accusations against Cook are a clear warning to other FOMC members to bow to government pressure for substantial rate cuts … This makes gold investments more attractive in such an environment,” Commerzbank said in a note, in reference to the Federal Open Market Committee.

Separately, a federal appeals court said late Friday that Trump’s global tariffs were illegally imposed under an emergency law, increasing uncertainty for American importers while potentially delaying the economic dividends promised by the administration.

Key jobs report

Attention now turns to US nonfarm payrolls data on Friday for cues on the size of a September rate cut.

A weak job print this week could reignite the conversation around the possibility of a 50 bps rate cut at the meeting, said Zain Vawda, analyst at MarketPulse by OANDA.

Markets are pricing in a 90% chance of a 25-basis-point rate cut at the Fed’s September 17 meeting, according to the CME FedWatch tool

“I do not think this will happen, even if we get a poor NFP print, but market participants may start to price in the possibility, and that could fuel the gold rally,” Vawda added.

(With files from Bloomberg and Reuters)