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| Gold Prices |
Gold surges as US inflation data and Fed rate cut expectations drive demand
Gold prices climbed sharply, approaching record highs in late August 2025. Spot gold rose 0.8% to $3,445.87 per ounce, while US gold futures jumped 1.1% to $3,513.50. This marks gold’s strongest monthly performance since April. Investors reacted to persistent US inflation and growing expectations for Federal Reserve interest rate cuts, which boost demand for non-yielding precious metals like gold.
The US personal consumption expenditures (PCE) index, the Fed’s preferred inflation gauge, remained elevated, signaling ongoing inflation pressures. However, consumer spending in July increased at the fastest pace in four months, supporting economic resilience. As a result, markets priced in an 89% probability of a 25-basis point Fed rate cut at the September meeting, up from 85% previously.
Fed independence concerns and geopolitical risks reinforce gold’s safe-haven appeal
Meanwhile, uncertainty surrounding the Federal Reserve’s institutional independence intensified after the controversial firing of Governor Lisa Cook by President Donald Trump. A federal judge is reviewing the legality of this decision, further fueling market unease. This political risk has driven strong inflows into gold ETFs, adding nearly 15 tons over two days.
Analysts note that while gold benefits from these uncertainties, its upside beyond $3,400 faces increasing resistance. Additionally, expectations of central bank bullion purchases in September further underpin gold prices. These factors maintain gold’s position as a preferred safe-haven asset amid global political and economic turmoil.
Market outlook: gold price momentum balanced by technical resistance
Gold has risen more than 30% year-to-date, reaching an all-time high of $3,500 in April. The metal’s outlook depends on Fed policy clarity, inflation trends, and geopolitical developments. A lower US dollar, which is set for a monthly decline of 2%, also supports gold’s price momentum. However, limited upside near current levels suggests caution for investors amid tightening technical resistance.
ScrapInsight Commentary
Gold’s near-record surge reflects heightened inflation concerns and Federal Reserve policy uncertainty. Persistent geopolitical risks and potential Fed rate cuts will keep gold attractive as a hedge, but investors should watch for technical resistance limiting short-term gains. Central bank bullion demand remains a key bullish factor for precious metals markets.
