Record-breaking Gold surge above $3,700 per ounce amid heightened anticipation for Federal Reserve interest rate reduction.
On September 16, 2025, gold prices surpassed $3,700 per ounce for the first time in history, marking a significant milestone in the gold market. This surge was driven by a combination of factors, including expectations of a US Federal Reserve interest rate cut this week, a weakening US dollar, and increased safe-haven demand.
US gold futures for December delivery increased 0.2% to $3,727.50 per ounce on September 16. The rally was also supported by central bank purchases, with central banks such as the Chinese central bank, Poland, and India buying substantial amounts of gold in recent months.
The Chinese central bank, for instance, increased its gold reserves for the tenth consecutive time by about 1.9 tons in August 2025. Poland added 49 tons in Q1 2025, while India has bought over 300 tons since 2024. Overall, central banks are expected to purchase between 900 and 950 tons of gold during 2025, with about 485 to 500 tons anticipated in the second half of the year.
The weakening US dollar, as indicated by the Bloomberg Dollar Spot Index, which fell 0.5% on September 16, also contributed to the gold price increase. Independent metals trader Tai Wong stated that gold is surging on a sharply weaker dollar on September 16.
The rally was further boosted by global capital moving away from the US dollar. Gold, which typically benefits in a low-rate environment, has been surging due to these factors. However, some profit-taking in gold may occur due to the upcoming Federal Reserve decision on September 17, 2025.
The surge in gold prices has been accompanied by a fall in the prices of other precious metals. Spot silver fell 0.2% to $42.64 per ounce on September 16, 2025, while platinum dropped 0.5% to $1,394.00 on the same day. Palladium also saw a 0.5% decrease, falling to $1,178.14 on September 16, 2025.
The global economic uncertainty and geopolitical risks are also supporting strong demand for gold as a safe asset. According to Zain Vawda, analyst at MarketPulse by OANDA, these factors are contributing to the increased demand for gold.
On September 16, US President Donald Trump called for a 'major' rate cut from the US Federal Reserve. Traders are pricing in a near-certain 0.25% rate cut at the conclusion of the Fed's two-day meeting on September 17. There is also a slight chance of a 0.50% reduction in the US Federal Reserve interest rate, according to CME's FedWatch tool.
As gold prices continue to rise, investors and traders will be closely watching the Federal Reserve's decision and its potential impact on the gold market.
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