Gold price sets new record in run-up to Fed meeting

Gold prices rose to a new all-time high on Monday, as investors geared up for this week’s Federal Reserve meeting with the expectation that the US central bank will finally let loose and start cutting interest rates.

Spot gold hit a fresh peak of $3,682.51 per ounce, about $9 higher than its previous high set nearly a week ago. US gold futures also jumped about 1% to $3,724.90 per ounce.

The latest move takes gold’s year-to-date gains up to 40%, with geopolitical uncertainty and robust central bank buying providing strong momentum for the safe-haven metal. After surpassing the $3,500 mark in April, gold has largely consolidated within a tight range, but analysts say it looks poised to break out in the near term.

The latest rally is largely driven by market-wide expectations of a quarter-point US rate cut this week after labour market data showed signs of weakness. “Expectations of a 25-basis-point rate cut are largely baked into the cake at this point,” Peter Grant, vice president and senior metals strategist at Zaner Metals, told Reuters.

Those expectations have also driven Treasury yields to the lowest level in months and weakened the dollar, making bullion more appealing as a store of value.

Traders are also pricing in at least another Fed rate cut before the end of the year, a sentiment that is also echoed by Grant, who gave $3,700 as his next upside target for gold. However, whether the US central bank will challenge these bets is a key question for investors.

This week’s Federal Open Market Committee meeting comes at a time when the Fed faces unusual pressure amid a leadership dispute and US President Donald Trump pushing for greater sway over policy. To analysts, a potential weakening of Fed’s independence could serve as another catalyst for gold. Those at Goldman Sachs recently predicted that gold could skyrocket to $5,000 an ounce should that scenario play out.

Other banks, including UBS, have also been raising their price targets for gold, which, in inflation-adjusted terms, is already at its highest.