Gold Prices Post Sharp Increase Amid Fed Rate Cut Bets

(MENAFN) Gold prices surged sharply on Tuesday, hitting an unprecedented peak fueled by growing expectations of a Federal Reserve rate cut in September and mounting worries over the Fed’s autonomy.

By 1730 GMT, the price for one ounce of gold climbed approximately 1.4% to an all-time high of $3,528.80. After reaching this peak, gold currently trades near $3,526.80.

Earlier this year, gold had already set new records, breaching the $3,500 mark amid escalating global trade tensions sparked by US tariffs. The precious metal, often seen as a "safe haven," has surged over 33% year-to-date.

Although gold prices had stabilized near $3,400 as fears over trade softened, renewed speculation of a Federal Reserve rate cut at the upcoming September meeting reignited demand for the asset.

The Fed, which faces persistent criticism from US President Donald Trump, is slated to announce its policy decision this month. Money market forecasts show an 88% chance of a rate cut in September, with expectations for two reductions before year-end.

With inflation falling short of projections in July and a slowdown in employment, markets anticipate a 25 basis-point reduction in the September meeting. The current Fed policy rate ranges between 4.25% and 4.5%.

At the Jackson Hole symposium in mid-August, Fed Chair Jerome Powell hinted at the possibility of easing.

"With policy in restrictive territory, the baseline outlook and shifting balance of risks may warrant adjusting our policy stance," he said.

Further fueling gold’s rally was President Trump’s decision to remove Fed Governor Lisa Cook, raising alarm over the Federal Reserve’s independence and prompting investors to seek refuge in the precious metal.

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