Gold prices surged to fresh record highs on Tuesday, buoyed by a weaker dollar and heightened expectations of a Federal Reserve interest rate cut.
Spot gold gained 0.4% to $3,692.87 per ounce as of 0945 GMT, after briefly touching $3,698.86 earlier in the session.
U.S. gold futures for December delivery advanced 0.3% to $3,730.50, underscoring strong investor appetite for the metal. Meanwhile, the U.S. dollar index fell to a more than two-month low against major currencies, adding fuel to gold’s rally.
UBS analyst Giovanni Staunovo highlighted that gold’s momentum is directly linked to the Fed’s policy outlook and the softer dollar. He warned, however, that market volatility could intensify if the Fed couples its rate cut with hawkish language.
Markets are now pricing in a near-certain 25-basis-point rate cut when the Fed concludes its two-day meeting on September 17, with a slim chance of a 50-basis-point reduction. According to the CME FedWatch tool, traders also expect further rate cuts into next year, which supports bullish sentiment for non-yielding bullion.
Political pressure has also entered the equation, with U.S. President Donald Trump urging Fed Chair Jerome Powell to deliver a “bigger” rate cut. Swissquote analyst Carlo Alberto De Casa noted that such expectations strengthen the case for gold’s extended rally into 2025.
Industry voices project gold’s trajectory will remain positive, though a healthy correction is likely before prices breach the $4,000 per ounce mark in 2026. Traders at the India Gold Conference in New Delhi said the metal’s strong fundamentals suggest continued upward momentum over the medium term.
Elsewhere in the precious metals market, silver held steady at $42.73 per ounce, platinum dipped 0.2% to $1,398.41, and palladium rose 0.5% to $1,190.18. The mixed performance highlights gold’s dominance as the standout safe-haven asset ahead of the Fed’s critical decision.
The rally reflects broader market sentiment that a weakening dollar and lower U.S. interest rates will keep gold in demand. With volatility expected around the Fed’s policy statement, investors are positioning for further gains in bullion.
