Gold price hits record high Tuesday, fueled by weakening dollar and rate cut hopes

The valuation of gold made a very significant achievement Tuesday, reaching an all-time record high over $3,500 per ounce on average, fueled by the weakening U.S. dollar (as a result of lower rates expectations), and the connected September rate cut, which is almost certain to happen as PCE data shows inflation is not rising rapidly, and Jerome Powell announced his own intention of a rate cut in his late-August Jackson Hole Speech.

A pile of gold bars, www.randjjewelry.com.

On Tuesday, gold immediately rallied by nearly 2%, reaching a new high price of $3,586.30 as of 12:30 PM EST. In the year of 2025, gold rallied a total of over 30%, with several months open for further gains. Silver rallied by a similar amount, 2.08%, as of the same time and date.

By far the greatest reason for the gold rise has been the Federal Reserve's growing willingness to pursue rate cuts for the first time since December 2024. Although a mere 25 basis point rate cut is expected over the "full point" cut conservatives demand, it still is a great source of hope for investors who have anticipated this moment since June. As of September 2nd, the CME FedWatch tool shows a 90% chance of a Fed rate cut on September 17th. Also, Polymarket has chances at roughly 82%, with a small 15% predicting no change, and less than 1% predicting a rate increase.

Kyle Rodda, a financial market analyst at Capital.com, argues the gold rally to have been attributed to, "A corollary of the weaker economic backdrop and expectations of US rate cuts is boosting precious metals... Another factor is the festering confidence crisis in dollar assets because of US President Donald Trump’s attack on Fed’s independence."

Yes, even Trump's attempted firing of Fed official Lisa Cook also has a factor. On late August, Trump urged the resignation of the official over alleged mortgage fraud, with this being unproven. In addition, if it happens, it would be the first time in 112 years a sitting president overreached executive power to intervene in U.S. Fed Reserve Bank policy.

Both of these led to the USD falling in valuation, causing currency holders and investors to shift to gold, silver, or cryptocurrencies, all of which experiencing massive rallies in recent weeks compared to the USD.