Gold hits new record high on Fed rate cut bets

ISTANBUL

The price of gold rose sharply to the new record high on Tuesday, triggered by expectations of a September Fed rate cut, and concerns about the central bank's independence.

The price of one ounce of gold rose around 1.4% to reach the all-time high of $3,528.80 as of 1730GMT.

After hitting the record high, the price of gold currently stands at around $3,526.80.

Gold had already reached record highs earlier this year, surpassing $3,500 amid global trade tensions triggered by US tariffs. The "safe haven" asset gained more than 33% so far this year.

While prices had since stabilized at around $3,400 as trade fears eased, rising expectations of a rate cut in Fed's September meeting again boosted demand for the metal as a traditional safe haven asset.

The Fed, under the constant criticism from US President Donald Trump, will be announcing its decision this month. The bank is 88% likely to issue a rate cut this month, according to money market estimates, and cut rates twice in total by the end of the year.

As inflation dipped below expectations in July and employment slowed, markets expect a 25 basis-point rate cut in the September meeting. The policy rate currently stands between 4.25% and 4.5%.

In mid-August, at the Jackson Hole symposium, Fed Chair Jerome Powell signaled a possible rate cut.

"With policy in restrictive territory, the baseline outlook and shifting balance of risks may warrant adjusting our policy stance," he said.

Trump's move to remove Fed Governor Lisa Cook also boosted demand for gold, as it raised concerns about the central bank's independence.