Gold prices surged to new record levels in Asian trading on Tuesday, driven primarily by haven demand as recent Federal Reserve commentary raised caution about further interest rate cuts.
Investors are closely watching a series of key U.S. economic releases this week, including a speech by Fed Chair Jerome Powell later Tuesday. In addition, August’s purchasing managers index (PMI) data is due today, with a critical inflation measure scheduled for later in the week.
Heightened uncertainty around U.S. policy added to risk-off sentiment after President Donald Trump announced steep fees on a widely used work visa. Trump also made controversial statements on vaccines, autism, and a common painkiller on Monday, stirring turbulence in pharmaceutical shares.
A retreat in risk-driven assets, particularly Asian equities, supported gold as a safe-haven asset. Chinese stocks fell sharply on Tuesday after a strong rally in the previous month.
Spot gold climbed to a record $3,759.18 per ounce, while gold futures reached $3,794.82/oz.
Fed Officials Signal Caution on Rate Cuts, Powell Speech in Focus
Several Fed officials expressed a cautious approach on further rate reductions on Monday. Atlanta Fed President Raphael Bostic said in an interview that he did not support an October rate cut due to concerns over persistent inflation.
Cleveland Fed President Beth Hammack echoed this sentiment, noting that current policy was still not restrictive enough. Neither official serves on the Fed’s rate-setting board.
Board member Stephen Miran, who assumed his role just a week ago, continued advocating for substantial rate cuts, aligning largely with Trump’s stance. Miran was the lone dissenter in last week’s Fed meeting, calling for a 50-basis-point cut instead of the 25 bps enacted.
Powell stated last week that the rate cut was driven primarily by concerns over a slowing labor market and that the Fed would ease policy further if job weakness persists. He also highlighted ongoing inflation concerns, particularly amid Trump’s tariffs. The Fed Chair is scheduled to speak at 12:35 ET (16:35 GMT).
Other metals saw modest gains following the Fed’s rate cut last week, although they lagged gold. Spot platinum rose 0.3% to $1,421.05/oz, and spot silver gained 0.2% to $44.313/oz. Industrial metals were weaker: LME copper futures fell 0.3% to $9,975.05 per ton, and COMEX copper dropped 0.5% to $4.6275 per pound.
Markets Await U.S. PMIs and PCE Data
U.S. PMI figures for September are expected later Tuesday, offering insights into the country’s business activity. The data is projected to show modestly slower growth in both manufacturing and services, raising concerns about a cooling economy.
Friday’s PCE price index release—the Fed’s preferred inflation gauge—is set to be the week’s key economic event. Economists forecast that core PCE inflation remained above the Fed’s 2% annual target in August, signaling persistent price pressures.
Ahead of the PCE data, markets will also monitor the final reading on second-quarter GDP. Previous figures indicated stronger-than-expected growth in Q2 despite tariff-related headwinds.
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