(Bloomberg) — Gold hit a record high as the prospect of Federal Reserve rate cuts and growing concerns over the central bank’s future gave fresh legs to the multiyear rally in precious metals.
Bullion for immediate delivery rose as much as 0.9% to $3,508.73 an ounce — surpassing the previous peak reached in April — before paring some gains during early trading in Asia on Tuesday. The precious metal has gained more than 30% this year, making it one of the best-performing major commodities.
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The latest run has been fueled by expectations that the US central bank will lower interest rates this month, after Fed Chair Jerome Powell cautiously opened the door to a reduction. A key US jobs report this Friday is likely to add to signs of an increasingly subdued labor market — supporting the case for cuts. That’s boosted the allure of precious metals, which do not pay holders interest.
“Investors adding to gold allocations, especially as Fed rate cuts loom, are pushing prices higher,” said UBS Group AG strategist Joni Teves. “Our base case is that gold continues to make new highs over the coming quarters. A lower interest rate environment, softer economic data and continued elevated macro uncertainty and geopolitical risks boost gold’s role as a portfolio diversifier.”
Both gold and its cheaper cousin silver have more than doubled over the past three years, with mounting risks in the spheres of geopolitics, the economy, and global trade driving increased demand for the time-honored haven assets. An escalation in President Donald Trump’s assaults against the Fed this year has become the latest cause for investor alarm, with concerns over the central bank’s independence threatening to erode confidence in the US.
Markets are waiting for a court ruling on whether Trump has legitimate grounds to remove Fed Governor Lisa Cook from the central bank. Separately, a federal appeals court said late Friday that the president’s global tariffs were illegally imposed under an emergency law, increasing uncertainty for American importers while delaying the economic dividends the administration has promised.
Gold last spiked to a record in April after Trump unveiled an initial plan to introduce sweeping tariffs on most US trading partners. Prices soon eased and remained largely range-bound for several months, as haven demand cooled due to the president walking back some of his most aggressive trade proposals.
Source: Gold Punches Through $3,500 to Hit Record High on Rate-Cut Bets
