Gold prices surged to new record levels in Asian trading on Tuesday, extending strong gains from previous sessions amid mounting expectations of a Federal Reserve interest rate cut next week and a softer U.S. dollar.
Investor demand for safe-haven assets was further supported by political instability in France, where Prime Minister Francois Bayrou resigned following a failed vote of confidence in the National Assembly. Additional uncertainty in Japan, after PM Shigeru Ishiba stepped down, and the possibility of further U.S. sanctions on Russia following Moscow’s deadly weekend strike against Ukraine, also bolstered gold’s appeal.
At 00:44 ET (04:44 GMT), spot gold traded 0.6% higher at a record $3,656.70 an ounce, while December Gold Futures peaked at $3,695.25/oz.
Fed Easing Expectations Propel Gold
Bullion has climbed sharply since last week, driven by data showing a cooling U.S. labor market, most notably nonfarm payrolls, which indicated minimal job growth in August. These reports fueled expectations that the Fed will cut interest rates in September, with markets pricing in a 92.4% chance of a 25-basis-point reduction during the Fed’s September 16-17 meeting, according to CME FedWatch. A 7.6% probability of a larger 50-basis-point cut is also factored in.
Several Fed officials have signaled openness to rate cuts amid the softening labor market but have cautioned that inflation remains persistent, particularly with price increases stemming from U.S. President Donald Trump’s trade tariffs. Markets will monitor U.S. inflation data for August for further signals, as most of Trump’s tariffs took effect last month. Lower rates generally support gold and other non-yielding metals by reducing the opportunity cost compared with government bonds.
Broader Metal Markets Show Gains
Other precious metals also rose on Tuesday. Platinum Futures were up 0.6% at $1,397.25/oz, while Silver Futures added 0.2% to $41.30 an ounce, slightly below last week’s 14-year high.
Copper prices inched higher, with London Metal Exchange benchmark futures up 0.2% at $9,940.15 a ton, and U.S. Copper Futures rising 0.2% to $4.58 per pound.
“Uncertainty over US tariffs on copper imports shifted supply from China to the US in the first half of the year. This trend may reverse in the second half, as Trump has delayed plans for a 50% tariff on refined copper for now,” ING analysts noted.
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