Gold prices climbed to fresh records Tuesday, lifted by expectations that the Federal Reserve will cut interest rates this week and by a wave of investor demand seeking safety from economic and geopolitical turmoil.
December gold futures settled $4.20 higher at $3,723.30 per ounce after hitting an intraday peak of $3,739.30, a new record. Spot gold has gained more than 39% so far in 2025, putting the metal on track for its best year since 1979, when gold soared 130% amid runaway inflation and slowing economic growth.
The two-day Federal Open Market Committee meeting concludes Wednesday, with policymakers widely expected to deliver a 25-basis-point rate cut - the first since November 2024 - in response to weakening jobs data and rising concerns over a slowdown. "Expectations of a 25-basis-point rate cut are largely baked into the cake at this point," said Peter Grant, vice president and senior metals strategist at Zaner Metals. He added that "there could be one or two more rate cuts before the year-end."
Investors are positioning ahead of the Fed decision as updated projections may show slower U.S. growth and rising unemployment. Traders are also bracing for Fed Chair Jerome Powell's press conference, where he is expected to face sharp questioning on whether the central bank is acting too late to prevent a recession.
Safe-haven demand has accelerated against a backdrop of trade tensions, conflict in the Middle East and Ukraine, and inflationary pressures fueled by President Donald Trump's tariffs. "The fact that gold is uncorrelated from the S&P 500 and US Treasuries and is a portfolio hedge that is working well makes the investment case highly attractive," said Chris Weston, head of research at Pepperstone.
- December gold futures: $3,723.30 (+$4.20)
December silver futures: $43.80 (-$0.167), after hitting a 14-year high earlier Tuesday
U.S. dollar index: Seven-week low
10-year Treasury yield: 4.026%
Central banks continue to underpin demand, adding 1,086 tons of gold to reserves in 2024, according to the World Gold Council, as part of a broader de-dollarization trend. Bank of America strategists noted that "since 2001, gold has never declined in a scenario where U.S. CPI is above 2% and the Fed is easing monetary policy."
