Soaring Gold Hits New Heights as Anticipation for Interest Rate Decreases Intensifies
The value of gold has risen significantly for overseas buyers, thanks to a weaker US Dollar. This decline in the greenback can be attributed to assertive moves made by President Trump over the Federal Reserve.
On Tuesday, the Front Month Comex Gold for September delivery surged by $75.70, reaching an impressive $3,549.40 per troy ounce. Similarly, Front Month Comex Silver for September delivery shot up by 87.10 cents, hitting a new 52-week high of $41.071 per troy ounce.
These increases come amidst a broader trend of central banks doubling their gold purchases since 2022. The upcoming release of the US non-farm payrolls data this coming Friday may further influence the outlook for rates.
According to CME Group's FedWatch Tool, there is a 91.8% chance of a 25-basis-point rate cut in the next FOMC meeting. However, the current probability of a rate cut at the FOMC meeting on September 16-17, 2025, as indicated by the CME Group's FedWatch Tool, is not explicitly stated in the search results. Analysts suggest that such a cut is considered possible but not certain, given ongoing economic moderation, low unemployment, persistent inflation above the 2% target, and the Fed's careful assessment of risks and data before adjusting rates.
The increased interest in gold and silver can be linked to concerns from new tariff challenges and doubts over the independence of the US central bank. The ongoing conflict between Russia and Ukraine has also contributed to geopolitical tension, which may be another factor driving investors towards precious metals.
In a recent development, the US President Donald Trump's attempt to end the Russia-Ukraine war through a "carrot and stick" approach has not yielded tangible results. Ignoring Trump's call for negotiations, Russia intensified its attacks on Ukraine last week and continues to do so today.
Trump's administration has faced other challenges as well. Last Monday, he sacked Fed governor Lisa Cook over allegations of mortgage fraud. Additionally, a US Federal Appeals Court ruled that Trump's "reciprocal tariffs" are illegal, causing new uncertainty for all trading partners.
As these events unfold, investors continue to seek safety in precious metals, driving prices higher and higher. The gold market, in particular, has set a new record high, with silver following close behind. It remains to be seen how these trends will continue in the coming weeks and months.
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