Gold prices surged to an all-time high in Asian trade on Tuesday as growing expectations of a Federal Reserve interest rate cut boosted demand for safe-haven assets. Spot gold reached $3,654.97 per ounce, while December futures peaked at $3,694.75/oz.
The rally was fueled by a weakening U.S. labor market, with nonfarm payrolls showing almost no job growth in August. This reinforced bets that the Fed will cut rates during its September 16–17 meeting. Markets are currently pricing in a 92.4% chance of a 25-basis-point cut and a 7.6% chance of a larger 50-basis-point reduction, according to CME FedWatch. Lower interest rates typically favor gold by reducing the opportunity cost of holding non-yielding assets compared to bonds.
Political turmoil in Europe also drove safe-haven flows, with French Prime Minister Francois Bayrou resigning after losing a confidence vote. His departure marks France’s fifth prime minister in less than two years, intensifying concerns over President Emmanuel Macron’s leadership and the country’s economic stability.
Geopolitical risks added further momentum, as the U.S. considered new sanctions against Russia following a deadly strike on Ukraine. Rising tensions underscored gold’s appeal as a hedge against uncertainty.
While Fed officials have signaled openness to rate cuts, they remain cautious about persistent inflation, especially as recent trade tariffs imposed by U.S. President Donald Trump raise price pressures. Investors are now awaiting August inflation data for more clarity on the Fed’s path forward.
With monetary easing prospects, political instability in Europe, and escalating geopolitical risks, gold continues to shine as investors seek safety in turbulent markets.