Gold at all-time high above $3,500 on US rate cut prospects

Gold prices scaled the $3,500 per ounce level to hit a record high on Tuesday, as mounting expectations for a US Federal Reserve interest rate cut this month lifted demand for the precious metal.

Spot gold was steady at $3,476.48 per ounce as of 0947 GMT, after hitting a record high of $3,508.50 earlier in the session. Bullion has gained 32 per cent so far this year.

US gold futures for December delivery gained 0.9 per cent to $3,546.80.

“Gold’s rally is set to be heavily influenced by how much the Fed’s rate-cutting path adheres to market projections,” said Han Tan, chief market analyst at Nemo.money.

“It still enjoys enough fundamental tailwinds, from central bank purchases to safe-haven demand - especially if trade tariffs take a meaningful toll on global economic growth - going into next year,” he added.

Traders are currently pricing in a 90 per cent chance of a 25-basis-point Fed rate cut on September 17, according to the CME FedWatch tool. Non-yielding gold typically performs well in a low-interest-rate environment.

Long regarded as a dependable hedge against geopolitical and economic turmoil, gold has rallied to multiple record highs in 2025, drawing support from ongoing central bank buying amid a move away from the US dollar, strong safe-haven demand in light of geopolitical and trade uncertainty, plus broad dollar weakness, analysts say.

Spot gold prices rose 27 per cent in 2024, and broke the $3,000 per ounce level for the first time in March this year as uncertainty around US President Donald Trump’s trade policies sent investors flocking to the safe-haven asset. Meanwhile, Trump has criticised the Fed and its chair, Jerome Powell, for months for not lowering interest rates.

Investors are now looking forward to the US nonfarm payrolls data due on Friday to determine the size of an expected Fed rate cut later this month.

“All the indicators - fundamental and technical - point toward a sustained rally. As always, we might not go up in a straight line, but we are in ‘buy the dip’ mode... plus, gold remains an uncorrelated asset to stocks, real estate, and credit,” said Hugo Pascal, a precious metals trader at InProved.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 1.01 per cent to 977.68 tonnes on Friday - its highest level since August 2022.

In a quarterly Reuters poll conducted in July, analysts forecast gold would average $3,220 in 2025, up from January’s estimate of $2,756/oz.

Spot silver was down 0.7 per cent at $40.39 per ounce, after hitting its highest since September 2011 in the previous session.

Platinum lost 0.9 per cent to $1,386.40 and palladium fell 1.5 per cent to $1,120.54.

Meanwhile US stock index futures fell on Tuesday, as investors returning from a long holiday weekend shifted their focus to upcoming crucial economic reports, which could shape the Federal Reserve’s stance on monetary easing.

The August nonfarm payrolls report, due on Friday, is the centerpiece of the week and will follow a monthly private payrolls reading and job openings figures.

Markets are pricing in about a 92 per cent chance of a 25-basis-point cut in interest rates at the Fed’s meeting later this month, according to the CME Group’s FedWatch tool.

Investors’ dovish tilt came after July’s weak job report, with Fed Chair Jerome Powell acknowledging the growing risks to the labour market at the Jackson Hole symposium, helping the S&P 500 and the Dow log their fourth consecutive month of gains in August.

The Nasdaq logged its fifth straight monthly gain last month.

At 7:40 am  ET, Dow E-minis were down 253 points, or 0.55 per cent, S&P 500 E-minis were down 47.75 points, or 0.74 per cent and Nasdaq 100 E-minis were down 220.75 points, or 0.94 per cent.

Yields on longer-dated US Treasuries rose on Tuesday, with those on the 10-year and 30-year notes at their highest levels in more than a month, pressuring equities.

The CBOE Market Volatility index also touched its highest mark in more than three weeks and was last up 1.84 points at 17.96.

Hedge funds remained hesitant about buying US stocks at the outset of seasonally dour September, according to Goldman Sachs data up to August 25.

The benchmark S&P 500 has lost 1.5 per cent on average in September - its worst month - since 2000, according to data compiled by LSEG. DataTrek Research said it is the only month since 1958 where the index’s mean returns are negative.

Reuters