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

Traders are currently pricing in a 90% chance of a 25-basis-point Fed rate cut on September 17, according to the CME FedWatch tool

Gold prices scaled the $3,500 per ounce level to hit a record high on Tuesday, as mounting expectations for a U.S. 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% so far this year.

U.S. gold futures for December delivery gained 0.9% 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% 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 U.S. dollar, strong safe-haven demand in light of geopolitical and trade uncertainty, plus broad dollar weakness, analysts say.

Spot gold prices rose 27% in 2024, and broke the $3,000 per ounce level for the first time in March this year as uncertainty around U.S. 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 U.S. 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% to 977.68 tons 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. [PREC/POLL]

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

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