Gold Hits Record $3,600 on US Rate Cut Expectations and Fed Independence Concerns

Gold Surges 9% in Three Weeks
Cumulative Gain Reaches 37% This Year
Investors Watch Outcome of Cook's Fed Dismissal Closely

The price of gold has once again broken its all-time record. This surge is driven by expectations of interest rate cuts in the United States and concerns over the weakening independence of central banks, which have fueled strong buying interest in gold.

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On September 8 (local time) at the New York Mercantile Exchange, the spot price of gold closed at $3,632.51 per troy ounce (approximately 31.1g), up 1.2%. During intraday trading, it soared to as high as $3,646.29, setting a new all-time high. On the same day, the December gold futures price rose 0.7% to $3,680.30 per ounce. Gold prices have climbed 9% over the past three weeks, and the cumulative increase since the beginning of this year has reached 37%.

The recent sharp rise in gold prices is attributed to weakening confidence in dollar assets due to concerns about inflation in the United States and surging debt levels.

Amid persistent inflation worries stemming from the Donald Trump administration's fiscal spending and tariff policies, gold is gaining attention as a hedge against inflation.

Additionally, the Financial Times (FT) of the United Kingdom analyzed that the weaker-than-expected U.S. employment data for August further fueled the rally in gold prices. Employment figures are considered a key variable in gold price trends. Peter Grant, Vice President and Chief Precious Metals Strategist at JN Metals, told CNBC, "Ongoing weakness in employment, combined with expectations that the Fed will continue cutting rates through early 2026, will provide consistent support for gold prices."

Based on this weak employment data, the market expects the Federal Reserve to cut its benchmark interest rate by at least 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting scheduled for next week. Some experts are even raising the possibility of a 'big cut' of 0.5 percentage points. According to CME FedWatch, the probability of a 0.25 percentage point cut at the September FOMC is currently reflected at 88%, while the probability of a 0.5 percentage point cut is about 12%.

Typically, gold prices move inversely to interest rates. When interest rates fall, expected returns from bond investments decrease, prompting investors to prefer alternative assets such as gold. Chris Turner, Global Head of Markets at ING, stated, "Expectations of Fed rate cuts are strengthening gold's status as an inflation hedge."

Daan Struyven, an analyst at Goldman Sachs, believes that if private investors exit dollar assets, especially U.S. Treasury bonds, on a large scale, gold prices could rise even further. Analysts at BlackRock Investment Institute also noted in a recent report, "Investors can no longer rely on long-term U.S. Treasuries for protection during stock market downturns," adding, "In contrast, gold has surged as investors seek alternative ways to build resilient portfolios."

There are also projections that the direction of gold prices could change depending on the outcome in court regarding President Trump's attempt to dismiss Federal Reserve Governor Lisa Cook. Goldman Sachs forecasted that if President Trump continues efforts undermining the Fed's independence, growing distrust among investors could drive gold prices up to $5,000 per ounce.

Pierre-Alain Wavre, Director at Pictet Asset Management, said, "We have doubled our allocation to gold," adding, "After President Trump's attack on Governor Cook, we anticipated further upside potential, which has given us confidence to maintain our increased gold position."