Gold breaks $3,700 per ounce for the first time as Fed rate cut expectations soar

Gold prices surged past $3,700 per ounce for the first time in history on Tuesday (September 16, 2025), driven by rising expectations of a US Federal Reserve (Fed) interest rate cut this week. The rally was supported by safe-haven demand, central bank purchases, and a weakening US dollar, Reuters reported.

Spot gold rose 0.3% to $3,690.59 per ounce at 10:49 a.m. ET (14:49 GMT) after earlier hitting a record high of $3,702.95 per ounce. US gold futures for December delivery increased 0.2% to $3,727.50 per ounce.

“Global economic uncertainty and geopolitical risks continue to support strong demand for gold as a safe asset. However, the recent surge is largely driven by expectations of a sharp Fed rate cut,” said Zain Vawda, analyst at MarketPulse by OANDA.

Traders are pricing in a near-certain 0.25% rate cut at the conclusion of the Fed’s two-day meeting on September 17, with a slight chance of a 0.50% reduction, according to CME’s FedWatch tool. On Monday, US President Donald Trump called on Fed Chair Jerome Powell to implement a “major” rate cut.

Gold, which offers no interest, typically benefits in a low-rate environment.

Dollar weakness fuels gold rally

The US dollar fell to a two-month low against major currencies, making gold cheaper for overseas buyers. “Gold is surging on a sharply weaker dollar, which has fallen to levels not seen since July,” said independent metals trader Tai Wong. “However, with a major Fed decision tomorrow, some profit-taking should not come as a surprise.”

Gold has gained roughly 41% since the start of 2025, surpassing $3,600 per ounce on September 8. Analysts attribute the rise to continued central bank buying, inflows into safe-haven assets, and global capital moving away from the US dollar, which continues to weaken.

Spot gold rose 27% in 2024, breaking $3,000 per ounce for the first time in March amid uncertainties over Trump-era trade policies. Meanwhile, spot silver fell 0.2% to $42.64 per ounce after reaching its highest level since September 2011 earlier in the session. Platinum dropped 0.5% to $1,394.00 and palladium fell 0.5% to $1,178.14.

On Wednesday, Bloomberg reported gold was up 0.1% at $3,694.24 per ounce at 8:20 a.m. Singapore time, with the Bloomberg Dollar Spot Index down 0.5% on Tuesday. Silver remained just below its 14-year high, while palladium rose slightly and platinum held steady.