Gold prices reached new record highs in Asian trading on Tuesday, fueled by safe-haven demand as recent comments from Federal Reserve officials prompted caution over potential interest rate cuts.
Investors are closely watching a series of U.S. economic releases this week, including a key address from Fed Chair Jerome Powell later today. August’s PMI data is also due, along with an inflation report that is set to be the week’s highlight.
Market uncertainty was heightened after U.S. President Donald Trump announced steep fees on a widely used work visa. Trump’s controversial remarks on vaccines, autism, and a popular painkiller on Monday further rattled pharmaceutical shares.
Risk-off sentiment in equities, particularly across Asia, supported gold. Chinese stocks retreated sharply on Tuesday after a strong rally last month.
Spot gold hit $3,759.18 per ounce, setting a new record, while gold futures peaked at $3,794.82/oz.
Fed Officials Voice Caution on Further Rate Cuts
Several Fed officials signaled restraint regarding additional rate reductions on Monday. Atlanta Fed President Raphael Bostic noted in an interview that he did not support an October cut due to persistent inflation concerns.
Cleveland Fed President Beth Hammack shared similar views, stating that current monetary policy was not restrictive enough. Neither of the two serve on the Fed’s rate-setting board.
Newly appointed board member Stephen Miran maintained his calls for larger rate cuts, largely echoing Trump’s view. Miran was the lone dissenter in the Fed’s recent meeting, advocating a 50-basis-point cut instead of the 25 bps implemented.
Powell emphasized last week that the recent cut was driven mainly by worries over a slowing labor market, while signaling that the Fed would consider further easing if job weakness persists. He also underlined ongoing inflation concerns, especially in light of Trump’s tariffs. Powell’s speech is scheduled for 12:35 ET (16:35 GMT).
Other precious metals gained modestly after last week’s Fed cut. Spot platinum rose 0.3% to $1,421.05/oz, and spot silver increased 0.2% to $44.313/oz. Industrial metals were weaker: LME copper futures fell 0.3% to $9,975.05 per ton, and COMEX copper slipped 0.5% to $4.6275 per pound.
Markets Await U.S. PMIs and PCE Inflation Data
U.S. PMI figures for September, due later Tuesday, are expected to show slightly slower expansion in both manufacturing and services, raising concerns about a cooling economy.
Friday’s PCE price index, the Fed’s preferred measure of inflation, will be the week’s main event. Analysts anticipate that core PCE inflation remained above the Fed’s 2% annual target in August, signaling persistent inflationary pressures.
Prior to the PCE release, markets will also review the final second-quarter GDP reading. Preliminary figures suggested stronger-than-expected growth in Q2, despite headwinds from tariffs.
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