Gold prices near record highs as Fed rate cut expectations and geopolitical tensions boost demand

Gold holds firm on Fed policy outlook

Gold prices stayed close to record highs on Tuesday, supported by growing expectations of a US Federal Reserve interest rate cut. Markets now estimate a 90% probability of a 25-basis-point reduction at the upcoming Fed meeting, after San Francisco Fed President Mary Daly reaffirmed her support for easing monetary policy.

Nonfarm payrolls in focus

Investors are now awaiting the release of Friday’s US nonfarm payrolls data, which could significantly influence the Fed’s decision. Analysts say weaker employment figures would further strengthen the case for non-yielding assets such as gold and other precious metals.

Fed independence questioned

Confidence in US financial assets has been shaken amid political pressure on the Fed. President Donald Trump’s recent criticism of Chair Jerome Powell and other Fed officials raised concerns over the bank’s independence. While defending Trump’s right to dismiss Governor Lisa Cook, Treasury Secretary Scott Bessent insisted the Fed remains autonomous.

Geopolitical risks drive safe-haven demand

Beyond monetary policy, escalating geopolitical strains are also fueling demand for bullion. North Korean leader Kim Jong Un met with China’s Xi Jinping and Russia’s Vladimir Putin, raising fears of deeper trilateral military cooperation. In the Middle East, the worsening humanitarian crisis continues to heighten investor appetite for safe-haven assets like gold.