Gold hits record high as US rate-cut hopes, softer dollar boost appeal

Gold prices climbed to an all-time high on Tuesday (Sep 2), extending gains to a sixth session on the back of a weaker US dollar and rising bets of a US interest rate cut this month.

Spot gold was up 0.5 per cent at US$3,492.26 per ounce, as at 9.57 am, after hitting a record high of US$3,508.50. US gold futures for December delivery gained 1.4 per cent to US$3,563.40.

“A corollary of the weaker economic backdrop and expectations of US rate cuts is boosting precious metals,” said Kyle Rodda, Capital.com’s financial market analyst.

“Another factor is the festering confidence crisis in US dollar assets because of US President Donald Trump’s attack on Fed independence.”

Trump has criticised the Federal Reserve and its chair, Jerome Powell, for months for not lowering rates, and recently took aim at Powell over a costly renovation of the central bank’s Washington headquarters.

On Monday, Treasury Secretary Scott Bessent said the Fed is and should be independent but added that it had “made a lot of mistakes” and defended Trump’s right to fire Fed governor Lisa Cook over allegations of mortgage fraud.

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Traders are currently pricing in a 90 per cent chance of a 25-basis-points Fed rate cut on Sep 17, according to the CME FedWatch tool.

Non-yielding gold typically performs well in a low-interest-rate environment.

Rate-cut expectations and worries over the Fed’s independence have weighed on the US dollar, which is languishing near a more than one-month low against its rivals, making gold less expensive for overseas buyers.

Data on Friday showed that the US personal consumption expenditures price index rose 0.2 per cent month-on-month and 2.6 per cent year-on-year, both in line with expectations.

Investors are now looking forward to the US non-farm payrolls data due on Friday to determine the size of an expected Fed rate cut later this month.

Elsewhere, spot silver slipped 1.5 per cent to US$40.61 per ounce, after hitting its highest since September 2011 in the previous session.

Platinum gained 1.6 per cent to US$1,417.16 and palladium fell 0.9 per cent to US$1,126.63. REUTERS