Gold Surges Past US$3,500 on Fed Rate Cut Anticipation

Gold prices soared to a record high above US$3,500 per ounce on September 2, 2025, driven by expectations of an interest rate cut from the United States Federal Reserve. The precious metal reached US$3,508.50 earlier in the trading session and was trading at US$3,487.55 per ounce by 06:33 (UTC) with a gain of 0.3 percent. US gold futures for December delivery were also on the rise, increasing by 1.2 percent to US$3,557.80.

This surge in gold prices reflects a broader trend within the market, with gold gaining 32 percent so far this year. Analysts attribute the increase primarily to a combination of a weaker US dollar and growing expectations that the Federal Reserve will announce a 25-basis-point rate cut during its meeting on September 17. According to the CME FedWatch tool, traders are currently pricing in a 90 percent chance of this cut.

Market Dynamics and Factors Influencing Gold Prices

The appeal of gold as a safe-haven asset has been bolstered by a weakening economic backdrop. Kyle Rodda, a financial market analyst at Capital.com, noted, “A corollary of the weaker economic backdrop and expectations of US rate cuts is boosting precious metals.” Additionally, concerns over the independence of the Federal Reserve have further eroded confidence in dollar-denominated assets. This situation has been exacerbated by ongoing criticism from former President Donald Trump regarding the Fed and its Chair, Jerome Powell, particularly following Trump’s disapproval of Powell’s management of the central bank’s operations.

On September 1, Treasury Secretary Scott Bessent defended the Fed’s independence while acknowledging past mistakes. He also supported Trump’s criticism regarding the potential dismissal of Fed Governor Lisa Cook amid allegations of mortgage fraud. These dynamics have contributed to a decline in the value of the US dollar, which is currently hovering near levels not seen in over a month against other major currencies. A weaker dollar makes gold less expensive for international buyers, thus enhancing its attractiveness.

Investors Look Ahead to Economic Indicators

Gold has long been regarded as a stable hedge against geopolitical and economic uncertainties. As the market adjusts to shifting trade policies and ongoing tensions, gold has recorded multiple all-time highs in 2025. Support for the metal has been evident from increased central bank purchases and strong safe-haven demand, driven by uncertainty surrounding trade relations and geopolitical conflicts.

Market analysts predict that gold could potentially rise to US$3,600 or higher by the end of the year if the Federal Reserve implements further rate cuts and if a resolution to the ongoing conflict between Russia and Ukraine remains elusive. Tim Waterer, chief market analyst at KCM Trade, remarked on the significant factors at play that could influence gold prices moving forward.

Investors are now closely monitoring upcoming economic data, particularly the US nonfarm payrolls report set for release on September 5. This data will be crucial for assessing the Fed’s potential rate cuts later in September. Silver prices have remained relatively stable, trading at US$40.64 per ounce after reaching their highest levels since September 2011. Platinum and palladium also saw movement, with platinum rising by 1 percent to US$1,412.95, while palladium dipped 0.7 percent to US$1,129.52.