Gold Breaks Records on Fed Rate Cut Hopes

(MENAFN) Gold smashed new highs, soaring above $3,600 per ounce as market expectations mount for a total 75 basis points in Federal Reserve rate cuts by year-end, compounded by a weakening US dollar.

The precious metal’s status as a safe haven is driving record-breaking momentum amid geopolitical tensions, economic uncertainties, and the ballooning US debt, which now tops $37 trillion.

On Tuesday, gold traded at $3,651.96, marking a 0.5% gain and a roughly 5% increase over the past week. Investor demand for gold is surging amid anticipated interest rate declines, pushing prices up 9% last month and more than 38% year-to-date—outpacing last year’s 27% rise.

Silver is following gold’s upward trajectory, hitting $41.36 per ounce—the highest since 2011—and climbing 40% this year, outperforming gold’s gains.

A growing number of investors see gold as a safer store of value than US bonds, driven by the Fed’s probable rate cuts this month. Cooling US labor market data has fueled expectations of three rate reductions—in September, October, and December—totaling 75 basis points.

The US economy’s mounting $37 trillion debt now carries interest costs exceeding the nation’s military spending, further bolstering demand for safe-haven assets like gold.

Trump-Fed Clash Escalates Amid Rate Cut Pressure
A power struggle is unfolding between President Donald Trump and the Federal Reserve as Trump intensifies pressure on the central bank to lower rates.

Last month, Trump targeted Fed Governor Lisa Cook—the first Black woman on the Fed’s Board of Governors—accusing her, via Bill Pulte of the Federal Housing Finance Agency, of mortgage fraud. Trump declared on Truth Social that he had “just cause” to remove Cook, marking the first time a US president has sought to fire a Fed governor.

Cook responded firmly, refusing to step down and affirming she will continue her role, stating, “I had no intention of being bullied to step down from my position because of some questions raised in a tweet,” and announcing plans to pursue legal action to “set the record straight.”

Cook’s lawyer Abbe Lowell suggested Trump’s true issue may lie in her opposition to rate cuts rather than the alleged fraud.

Low interest rates weigh on the US dollar and bond yields, enhancing gold’s appeal despite its lack of steady income. Typically, when rates rise, gold becomes less attractive compared to other safe investments like bonds. Yet earlier this year, gold hit record highs even as the US 10-year bond yield climbed above 4%.

The growing likelihood of Fed rate easing continues to reshape asset prices and weaken the US Dollar Index, which has dropped over 10% this year to 97.36.

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