Gold prices hit record high due to expectations of interest rate cuts and a weakening USD

Gold prices rose to a record high in the trading session on Tuesday, extending their increase streak to the sixth session thanks to the weakening of the USD and growing expectations of the US Federal Reserve (FED) cutting interest rates this month.

Spot gold rose 0.5% to $3,493.99 an ounce at 3:48 a.m. GMT, after hitting a previous record of $3,508.50. December gold futures on the US exchange increased by 1.4%, to $3,564.40/ounce.

Kyle Rodda, a financial market analyst at Capital.com, said: The weak economic context and expectations of a Fed rate cut are boosting the precious metal. In addition, there is a prolonged crisis of confidence in US dollar-denominated assets attacked by US President Donald Trump on the independence of the Fed.

Over the past few months, US President Donald Trump has repeatedly criticized the Fed and Chairman Jerome Powell for not cutting interest rates, and has recently attacked the cost of renovating the Fed headquarters in Washington.

On Monday, US Treasury Secretary Scott Bessent affirmed that the Fed is independent and needs to maintain its independence, but said that the agency "made many mistakes" and defended Mr. Trump's rights in firing Fed Governor Lisa Cook for alleged mortgage fraud.

According to CME's FedWatch tool, traders are currently pricing in a 90% chance that the Fed will cut interest rates by 25 basis points at its meeting on September 17. In a low interest rate environment, gold - which does not yield - often has an advantage.

Expectations of a rate cut and concerns about the Fed's independence have caused the USD (.DXY) index to fall to a one-month low against a basket of major currencies, thereby making gold cheaper for buyers holding other currencies.

Data released on Friday showed that the US personal consumption expenditure (PCE) price index increased by 0.2% compared to the previous month and 2.6% compared to the same period last year, as forecast.

Investors are now waiting for the US non-farm payrolls report due on Friday to determine the scale of the upcoming rate cut.

In other metals markets, spot silver rose 0.1% to $40.71/ounce, after hitting its highest level since September 2011 in the previous session. platinum rose 1% to $1,415.7/ounce, while palladium fell 0.7% to $1,129.03/ounce.