NEW YORK — Gold and silver prices hit all-time highs on Tuesday, fueled by growing expectations that the U.S. Federal Reserve will cut its benchmark interest rate this month and ongoing uncertainty surrounding U.S. tariff policy. The spot price of gold climbed past $3,500 per ounce, with silver also soaring to a new record of $40.8 per ounce.
In Asian trading, the spot price of gold rose by 0.9% to a record $3,508.70 per ounce, according to the Financial Times. While it later receded to around $3,497, the price still surpassed its previous peak set in April when President Donald Trump announced sweeping reciprocal tariffs.
Analysts attribute the strong demand for gold to investors' use of it as a hedge against inflation and broader macroeconomic uncertainty. David Wilson, head of commodity strategy at BNP Paribas, stated, "Everything is creating the perfect conditions for gold to appreciate. The increasing economic uncertainty is clearly making gold more attractive."
The rally also extended to the futures market, with gold futures for the near month on the New York Mercantile Exchange reaching a high of $3,557.1 per ounce on Monday, the highest level in over four months.
Fed Rate Cut Expectations and Political Pressure
A key driver behind the price surge is the widespread anticipation of a rate cut by the Federal Reserve at its upcoming Federal Open Market Committee (FOMC) meeting on September 16-17. According to the CME FedWatch Tool, the fed funds futures market is pricing in an 89.6% probability of a 0.25 percentage point rate cut. Gold prices typically move in the opposite direction of U.S. real interest rates.
Beyond monetary policy, President Trump's repeated pressure for rate cuts and his attempts to influence the Fed's board have raised concerns about the central bank's independence. This has also driven investors towards gold, which is traditionally considered a safe-haven asset.
European Central Bank President Christine Lagarde expressed her concern over Trump's interference, stating it "is very worrying for the stability of the U.S. economy and, as a result, the impact that the world's largest economy will have on the entire world."
An appeals court ruling that found Trump's reciprocal tariffs illegal has also contributed to the long-term economic uncertainty, further boosting the demand for safe-haven assets. While international gold prices had initially rallied after Trump's tariff policy announcement in April, they had been trading within a range until recently due to tariff suspensions and ongoing trade negotiations.
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