Gold prices hit another record Wednesday, extending a months-long rally driven by expectations of Federal Reserve rate cuts, mounting concerns about U.S. central bank independence, and weakening confidence in the dollar's global dominance.
Spot gold rose 0.6% to $3,554.79 per ounce by midmorning in New York after briefly touching $3,556.01, an all-time high. U.S. gold futures for December delivery climbed 0.8% to $3,621.30. Silver, platinum and palladium also advanced, with silver reaching $40.97, its highest level since 2011.
The surge comes as traders increasingly price in a 25-basis-point cut at the Fed's September meeting. According to CME Group's FedWatch tool, the probability stood at 92% on Wednesday. "Gold's rally has room to run, with short to medium-term targets around $3,600 to $3,800, and the breakout pattern suggesting $4,000 could be within reach by late first quarter next year," said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Fed Governor Christopher Waller reinforced expectations, repeating his call for a September cut. Governor Lisa Cook, meanwhile, publicly pushed back against President Donald Trump's efforts to remove her from office, underscoring political tensions that analysts say are fueling distrust in dollar-denominated assets. "Growing concerns over the independence of the U.S. central bank are further undermining trust in dollar-denominated assets and pushing investors toward gold," traders at Heraeus Metals noted.
Beyond U.S. politics, global economic uncertainties have boosted bullion's appeal. The euro zone economy is expanding only marginally, while trade risks persist as Trump prepares to ask the Supreme Court to validate his emergency tariffs following lower court setbacks.
The rally also reflects broader skepticism over the dollar's long-term role as the world's reserve currency. The greenback has fallen nearly 10% year-to-date, pressured by slower U.S. growth, tariff risks, and a Trump administration that has tolerated a weaker dollar. "Gold is the carpenter on the sailboat-helpful in a leak, dead weight otherwise," wrote Mark Malek, chief investment officer at Muriel Siebert & Co.
Aakash Doshi, head of gold strategy at State Street Investment Management, said the precious metal's momentum underscores its role as "an anti-dollar or alternative dollar asset." He cited central banks' sustained buying spree as part of a "multi-decade trend" of diversifying away from the dollar amid rising U.S. deficits.
Analysts warned that a weaker-than-expected U.S. payrolls report this week could cement the case for September easing, providing fresh momentum. "If the upcoming payrolls report comes in weaker than expected, that would strongly seal the case for a 25-basis-point rate cut in September, which will help gold further," Grant said.
