Gold and Silver Hit Record Highs Amid Rate Cut Expectations 

Gold and silver have continued to rise to new record highs, driven by high expectations of a rate cut from the Federal Reserve, geopolitical tensions and economic concerns. 

Gold has risen 30% YTD, while silver has outperformed gold with a 40% rise through the same period. Traders and investors are shifting to safe-haven assets as uncertainties surrounding US trade policies, central bank independence and fiscal policy concerns present threats to the global economy.  

Gold Hits New Record High 

Gold has reached a record high of $3,547 per ounce during the Asian session on Wednesday, September 3^rd. The rise, which saw a 1.72% increase on Tuesday, was mainly due to high expectations of a 25-basis point rate cut from the Federal Reserve on September 17^th, where markets are pricing in a 92% chance of a rate cut according to the CME FedWatch tool. Lower interest rates reduce the cost of holding non-yielding assets like gold, boosting its safe-haven appeal. ⁽¹⁾  

Global fiscal concerns and risk-off sentiments in financial markets have also supported the rise in gold. Stocks declined and bond yields surged as worries over high debt levels in major economies resurfaced. 

Central banks from Asia to the Middle East have been accelerating their purchases of gold for the fourth year in a row, adding a powerful tailwind to prices, with predictions being that at least 1,000 metric tonnes of gold will be purchased by governments for their gold reserves. ⁽²⁾  

The move reveals a falling reliance on the US dollar at a time when US’s fiscal trajectory and political battles are clouding its standing as the world’s reserve currency. 

Gold pulled back on Thursday, September 4^th due to profit taking, trading around $3,530 ahead of the US labor market release. 

Silver Outshines Gold 

Silver has outperformed gold, rising 40% YTD and moving above $40, a level not reached since September 2011. Silver’s rally was driven by the same factors that boosted gold. ⁽³⁾   

1. Expectations of a Fed rate cut 

2. Geopolitical tensions 

3. A weak US dollar   

Silver’s industrial demand was highly driven from the use of clean-energy technologies like solar panels. China’s solar cell exports rose over 70% in the first half of 2025, with strong shipments also being exported to India. The Silver Institute forecasts a fifth consecutive year of market deficits, tightening supply and supporting prices. ⁽⁴⁾  

Silver pulled back 1% to around $40.7 per ounce on Thursday, September 4^th, easing from 14-year highs as investors locked in profits ahead of key US labor market releases. 

Geopolitical and Trade Tensions 

Rising geopolitical and trade tensions have driven demand for safe-haven assets, as US President Trump’s ongoing criticism attacks on the Fed, has been combined with a ruling on whether he can fire Fed Governor Lisa Cook. This has raised concerns about the Fed’s independence.  

A federal appeals court has also ruled Trump’s tariffs as illegal, adding more uncertainty for US importers and impacting global trade.  ⁽⁵⁾  

Globally, tensions have been rising after Chinese President Xi Jinping warned of a choice between “peace or war” during a military parade, while Trump wrote on social media about Chinese conspiracies against the US. These developments have contributed to the surge in gold and silver. ⁽⁶⁾  

Focus on Upcoming US Labor Market Data 

Markets are now focusing on upcoming US labor market data that could heavily influence the Fed’s next decision. ADP employment, forecasted at 68k, alongside the ISM services PMI, which is forecasted at 51, will be released on Thursday, September 4^th. Nonfarm payrolls, forecasted at 75k, alongside the unemployment rate with a forecast of 4.3%, will be released on Friday, September 5^th. ⁽⁷⁾  

Signs of continued weakness in the labor market could raise speculation of more rate cuts, leading traders to wonder if there is still more to see from the precious metals rally. 

Sources: ⁽¹⁾ ⁽²⁾ ⁽³⁾ ⁽⁴⁾  Reuters, ⁽⁵⁾ ⁽⁶⁾ Bloomberg ⁽⁷⁾ Acuity