Gold Surges to Record High as Fed Uncertainty and Global Tensions Drive Demand
Gold (XAU/USD) extended its rally on Tuesday, soaring to a new all-time high of $3,791 before easing slightly to trade near $3,780. The precious metal continues to attract safe-haven inflows, supported by expectations of further Federal Reserve (Fed) rate cuts and ongoing geopolitical risks.
Fed outlook remains in focus
The market is still digesting last week’s 25-basis-point (bps) cut, with traders pricing in the possibility of two additional rate reductions before the end of 2025. Lower interest rates typically weigh on the US Dollar (USD) and Treasury yields, boosting demand for non-yielding assets like Gold.
However, Fed officials struck a more cautious tone on Monday. Governor Stephen Miran called for deeper 50 bps cuts, warning that current restrictive policy risks unnecessary job losses. In contrast, other policymakers—including Alberto Musalem, Beth Hammack, and Raphael Bostic—signaled a more measured approach to avoid reigniting inflationary pressures.
Traders are now closely watching Fed Chair Jerome Powell’s speech later on Tuesday for fresh policy guidance. Vice Chair Michelle W. Bowman is also expected to speak, alongside the release of preliminary September PMI data.
Markets react to mixed Fed signals
Investor sentiment has shifted slightly. According to CME FedWatch Tool, markets are pricing in a 92% chance of another 25 bps cut in October, with odds of an additional December move at 73%. Deutsche Bank noted that Monday’s cautious Fed commentary prompted a small pullback in easing expectations, from 45 bps to 43 bps by year-end.
Geopolitical risks fuel safe-haven flows
Beyond the Fed, geopolitical tensions continue to drive demand for Gold:
Russia-NATO tensions escalated after reported airspace violations.
Iran’s nuclear program faces renewed international pressure.
Middle East instability persists, reinforcing safe-haven sentiment.
China is reportedly encouraging foreign central banks to store reserves through the Shanghai Gold Exchange, signaling Beijing’s push for more influence in the bullion market.
Technical outlook: Bulls remain in control
Gold’s technical picture remains firmly bullish:
Price trades well above the 21, 50, and 100-period SMAs on daily and intraday charts.
The Relative Strength Index (RSI) shows overbought conditions, yet momentum stays strong.
Immediate support rests at $3,750, with deeper support at $3,700 and $3,620.
Unless Gold falls below $3,700, the path of least resistance remains higher, leaving the door open for new record highs in the near term.