Forex

Gold Hits Record High as Rate Cut Bets and Geopolitical Tensions Drive Rally

Russell Shor Written by Russell Shor

Gold hit a record high after stronger-than-expected US inflation data and a rise in jobless claims, strengthening the belief that the Federal Reserve will cut interest rates this week. In August, the producer price index increased by 0.2%, and unemployment claims rose to 230,000. The European Central Bank's rate cut also weakened the US dollar, pushing gold up to $2,581.

Gold has had an impressive year, gaining over 25%, driven by expectations of US rate cuts, significant central bank purchases, and growing geopolitical risks. In July, central banks, led by Poland, bought 37 tonnes of gold—the largest increase since January. Global uncertainty, particularly with US-China tensions, the war in Ukraine, and the upcoming US election, has made gold an even more attractive safe haven for investors.

Investor interest in gold-backed ETFs has surged, with global inflows continuing for the fourth consecutive month. These funds typically rise with gold prices, signalling renewed confidence after earlier declines in 2024.

Continued central bank buying and further rate cuts from the Federal Reserve are expected to keep driving gold's upward momentum, making it a solid investment in these uncertain times.

Russell Shor

Senior Market Strategist

Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.

Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.

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