Gold prices climbed to fresh record levels in Asian trading on Tuesday, building on gains from previous sessions as investors bet on a Federal Reserve interest rate cut next week and reacted to a weaker dollar.
Safe-haven demand increased amid political turbulence in France, where Prime Minister Francois Bayrou resigned after losing a vote of confidence in the National Assembly. Additional concerns arose in Japan following PM Shigeru Ishiba’s resignation and the threat of further U.S. sanctions on Russia after Moscow’s deadly weekend strike in Ukraine, boosting bullion’s appeal.
Spot gold traded 0.6% higher at $3,656.70 an ounce at 00:44 ET (04:44 GMT), while December Gold Futures reached $3,695.25/oz.
Interest Rate Expectations Support Gold
Gold’s recent rally was fueled by data showing a cooling U.S. labor market, particularly nonfarm payrolls in August, which revealed minimal job growth. These indicators have driven expectations of a Fed rate cut, with CME FedWatch showing a 92.4% chance of a 25-basis-point reduction at the September 16-17 meeting, and a 7.6% probability of a larger 50-bps cut.
Fed officials have indicated openness to easing rates amid labor market weakness, though inflationary pressures from U.S. President Donald Trump’s tariffs remain a concern. August U.S. inflation data will be closely watched, as most of Trump’s tariffs came into effect last month. Lower rates tend to benefit gold and other non-yielding assets versus government bonds.
Metals Extend Gains
Other metals also gained, with Platinum Futures up 0.6% at $1,397.25/oz and Silver Futures rising 0.2% to $41.30/oz, slightly below last week’s 14-year high.
Copper prices edged higher as London benchmark futures rose 0.2% to $9,940.15/ton, while U.S. futures gained 0.2% to $4.58/lb.
“Uncertainty over US tariffs on copper imports shifted supply from China to the US in the first half of the year. This trend may reverse in the second half, as Trump has delayed plans for a 50% tariff on refined copper for now,” ING analysts said.
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