Gold holds near record highs as Fed cut bets and geopolitical risks support demand

Gold prices held close to record territory on Tuesday, underpinned by mounting expectations of a Federal Reserve rate cut and continued geopolitical strains.

Markets are now pricing nearly a 90% chance of a 25-basis-point rate reduction at the upcoming Fed meeting as San Francisco Fed President Mary Daly reiterated her backing for easing.

Investors are awaiting Friday’s nonfarm payrolls release, which could prove decisive in shaping the central bank’s moves. Weak data could benefit non-yielding assets, such as precious metals.

Confidence in US assets has also been dented by concerns over the Fed’s independence. After recent criticism from President Trump of Jerome Powell and other Fed officials, Treasury Secretary Scott Bessent stressed the central bank’s autonomy while defending Trump’s right to dismiss Governor Lisa Cook.

Geopolitical tensions remained a strong tailwind for bullion. North Korea’s Kim Jong Un travelled to China to meet Xi Jinping and Vladimir Putin, raising the prospect of deeper trilateral military cooperation. In the Middle East, the humanitarian crisis deepened.