Gold surges past US$3,500 to record high on Fed rate cut bets

Spot gold in Asian trading climbed as much as 0.9% to a record US$3,508.73 per ounce this morning (September 2), surpassing the previous peak reached in April. The rally was driven by mounting speculation of a Fed rate cut and increasing uncertainty about the central bank’s direction.

According to Bloomberg, gold has risen more than 30% so far this year, making it one of the world’s best-performing commodities.

Reuters reported that spot gold was last up 0.5% at US$3,492.26 per ounce at 8.57am, after earlier touching the record high of US$3,508.50. US gold futures for December delivery rose 1.4% to US$3,563.40 per ounce, extending gains for a sixth straight session as a weaker US dollar and rate cut bets buoyed sentiment.

“Factors linked to a weakening economy and expectations of a US rate cut are supporting precious metals,” said Kyle Rodda, financial market analyst at Capital.com. “Another factor is the growing ‘crisis of confidence’ in dollar-denominated assets, stemming from US President Donald Trump’s attacks on the Fed’s independence.”

Trump has long criticised the Fed and its chairman, Jerome Powell, for resisting rate cuts. More recently, he attacked Powell over the costly renovation of the Fed’s headquarters and has raised the prospect of removing Lisa Cook from the Fed’s board.

On Monday, US Treasury Secretary Scott Bessent said the Fed “is and should be independent” but acknowledged that it had made many mistakes. He also defended Trump’s right to remove Cook, citing allegations of mortgage fraud.

The CME’s FedWatch tool currently assigns a 90% probability that the Fed’s policy-making committee (FOMC) will cut its benchmark interest rate by 25 basis points on September 17.

Meanwhile, silver also saw sharp moves. Spot silver hit a 14-year high on Monday before retreating, and was last down 1.5% at US$40.61 per ounce.