Gold hit a new record high on Wednesday (September 3), consolidating gains above the $3,500 level amid growing expectations of a Federal Reserve rate cut this month and concerns over US tariff policy and the independence of its central bank.

Spot gold rose 0.4% to $3,547.27 an ounce at 11:32 GMT, after hitting an all-time high of $3,549.53 earlier in the session. US gold futures for December delivery rose 0.6% to $3,613.30.

Adding to market uncertainty and potential trade tensions, US President Donald Trump's administration said it would ask the Supreme Court to expedite a ruling on tariffs declared illegal by a US appeals court last week. "The tariff issue and the barriers imposed by the Supreme Court will be a critical test for Trump, (and) regardless of the outcome, gold provides a welcome respite from market volatility for investors," said independent analyst Ross Norman.

"Interest rate cuts are starting to look certain, but questions now arise about whether further cuts will occur. Lower interest rates would stimulate economic activity in the US and further weaken the dollar, providing a strong boost to gold." Trump has been exerting relentless pressure on the Fed to cut interest rates and has openly discussed firing Fed Chair Jerome Powell.

In a sharp escalation, Trump last month attempted to fire Fed Chair Lisa Cook, triggering a critical legal challenge to the Fed's ability to function without political interference.

Expectations of a rate cut and concerns about the Fed's independence have weighed on the US dollar (.DXY), which has fallen more than 9% since the start of the year, making gold cheaper for foreign buyers. Investors are pricing in a 92% chance of a 25 basis point Fed rate cut by the conclusion of its policy meeting on September 17, according to the CME Group's FedWatch tool.

Non-yielding gold typically performs well in low-interest-rate environments. "I think given the geopolitical risks and the Fed's outlook, the gold rally may still have room to continue into 2025," said Zain Vawda, an analyst at MarketPulse by OANDA.

All eyes are now on the US non-farm payrolls data, due on Friday, for clues on the magnitude of a potential Fed rate cut. Analysts expect spot gold prices to range between $3,600 and $3,900 in the short to medium term, with the potential to test the $4,000 level in 2026 if economic and geopolitical uncertainty persists.

Elsewhere, spot silver fell 0.1% to $40.87 per ounce after hitting its highest level since September 2011. Platinum rose 0.1% to $1,404.09, and palladium rose 1.7% to $1,153.46. (alg)

Source: Reuters