Gold prices climbed to a new record high on Wednesday, climbing above the $4,200-per-ounce mark for the first time as investors flocked to the safe-haven asset amid renewed geopolitical tensions and growing expectations of further interest rate cuts from the US Federal Reserve. Spot gold rose as much as 1.6% to $4,217.95 per ounce, surpassing the previous record set earlier in the week. In New York, US gold futures mirrored the move, gaining 1.6% to reach $4,235.80 an ounce. The rally extends a months-long upward trend for the precious metal, which has gained 58% so far this year.

Market sentiment has been heavily influenced by expectations that the Federal Reserve will implement additional interest rate reductions before the end of the year. Traders are currently pricing in a 98% probability of a 25-basis-point cut in October, with another move in December fully priced in at 100%, according to data cited by Reuters. The anticipation follows comments from Fed Chair Jerome Powell on Tuesday, who struck a dovish tone regarding the US economy. Powell noted that the labor market remains in what he described as “low-hiring, low-firing doldrums.” The ongoing US government shutdown, which has halted the release of key economic data, has further complicated the policy outlook, leaving investors to rely on broader market signals.

Since August, the month preceding the Fed’s September rate cut, gold prices have advanced by more than 25%. Analysts suggest the combination of rate cut expectations and weakening macroeconomic data has fueled strong demand for gold as a store of value.

Beyond monetary policy, rising geopolitical tensions have added another layer of support for the metal. Relations between the United States and China have deteriorated in recent days, reigniting trade concerns and prompting investors to hedge against potential market volatility.

Broader Drivers Behind the Rally

Gold’s 58% rise in 2025 has been driven by a combination of macroeconomic and structural factors. Analysts point to sustained central bank buying, the global shift away from dollar-denominated assets — often described as “de-dollarization” — and inflows into gold-backed exchange-traded funds (ETFs). This convergence of drivers has bolstered gold’s appeal as both a hedge and a long-term investment. Investors have sought protection from a range of global uncertainties — from interest rate policy shifts to supply chain disruptions and regional conflicts — all of which have contributed to heightened market anxiety.

While the metal’s rally shows few signs of slowing down, some market observers caution that the pace of gains could trigger near-term volatility. The possibility of temporary corrections remains high as investors reassess positions ahead of key policy decisions later this year.