Gold surged to a new all-time high on Wednesday, surpassing $3,500 per ounce, as investors anticipated a possible interest rate cut by the US Federal Reserve this month amid concerns that ongoing tariff tensions could weigh on economic growth.
The precious metal, long regarded as a safe haven during periods of market uncertainty, rose 2.2% to $3,549.40 an ounce, marking its strongest session in three months and bringing year-to-date gains to 35%.
“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 new record highs,” said Suki Cooper, precious metals analyst at Standard Chartered Bank.
Traders are currently pricing in a 91.7% probability of a quarter-point cut from the current range of 4.25% to 4.5% at the Fed’s September 17 meeting, according to the CME FedWatch tool. As a non-yielding asset, gold typically benefits in a lower interest rate environment.
Analysts say this year’s record-breaking rally in gold has been fueled by persistent central bank purchases, diversification away from the dollar, safe-haven demand amid geopolitical and trade tensions, and broad weakness in the US currency.
Uncertainty over US policy, particularly trade tariffs under President Trump, has further boosted gold’s appeal. The president’s public clashes with Federal Reserve Chairman Jerome Powell, as well as attempts to remove Fed Governor Lisa Cook, have raised concerns about the central bank’s independence.
Commerzbank noted that the allegations against Cook “serve as a clear warning to other FOMC members to bow to government pressure for substantial rate cuts,” making gold investments more attractive in such an environment.
Natasha Kaneva, head of global commodities strategy at JP Morgan, which has set a year-end target for gold at $3,675 per ounce, said, “Central bank buying can continue to hold the floor for gold.”
