Gold hit a new high on Tuesday, driven by increased speculation regarding potential Federal Reserve rate cuts this year. Bullion increased by 0.3%, reaching a new record high of over $3,647 an ounce, surpassing the previous peak set on Monday. It rose by 2.5% over the last two sessions following unexpectedly weak US payrolls data on Friday, which led traders to anticipate three rate reductions this year, including a quarter-point decrease at the Fed’s upcoming meeting.

Gold often gains from reduced borrowing costs since it does not yield interest. The ability of gold to maintain its momentum from the rate-cut rally may depend on an upcoming benchmark revision of US jobs data expected later Tuesday, as well as the sentiment reflected in US producer and consumer inflation figures scheduled for Wednesday and Thursday. The response to the auctions of both short- and long-term Treasuries will be closely monitored. Gold has surged almost 40% this year, driven by central bank acquisitions and speculation about interest rate reductions, coupled with increased demand for safe-haven assets amid rising geopolitical tensions and concerns regarding the effects of President Donald Trump’s tariff policies on the global economic landscape.

The actions of the US leader regarding the Fed’s independence have contributed to the continuation of gold’s rally, which has now lasted for three years. Analysts and investors generally anticipate further increases for gold. The precious metal might surge to almost $5,000 an ounce if investors allocate a minor fraction of their holdings from Treasuries into bullion amid indications of increased political interference in the central bank. Exchange-traded funds have surged into bullion following last month’s conference, where Federal Reserve Chair Jerome Powell indicated a readiness to relax monetary policy. Monday’s inflows reached their peak in nearly three months.

Nonetheless, the overall ETF holdings of the bullion remain below the peaks observed during the Covid-19 pandemic and the onset of the Russia-Ukraine conflict, indicating potential for further growth. Bullion was priced at $3,645.61 per ounce as of 9:51 a.m. Singapore time. Silver remained unchanged, whereas palladium and platinum saw an increase.