Sept 2 (Reuters) - Gold held firm after surging to an all-time high above $3,500 per ounce on Tuesday, with investors piling into the metal on growing conviction of a Federal Reserve rate cut and lingering political and economic risks.
Spot gold was up 0.5% at $3,491.47 per ounce as of 10 a.m. EDT (1400 GMT), after hitting a record high of $3,508.50. Bullion has gained 33% this year.
U.S. gold futures for December delivery gained 1.1% to $3,554.30.
"The gold market is entering a seasonally strong period for consumption, coupled with expectations for a rate cut at the September Fed meeting. We continue to expect new record highs," said Suki Cooper, precious metals analyst at Standard Chartered Bank.
"We continue to expect further upside risk for gold prices and forecast gold to average $3,500/oz in Q3-25 and $3,700/oz in Q4-25," Cooper added.
Markets are pricing in a 90% chance of a 25-basis-point rate cut at the Fed's September 17 meeting, according to the CME FedWatch tool, opens new tab. Non-yielding gold typically benefits in a lower interest rate environment.
Analysts say gold's record run this year has been underpinned by sustained central bank purchases, diversification away from the U.S. dollar, resilient safe-haven demand amid geopolitical and trade frictions, and broad dollar weakness.
Uncertainty around U.S. policy under President Donald Trump has added to the appeal. His public clashes with the Fed, including criticism of Chair Jerome Powell and a push to remove Governor Lisa Cook, have raised concerns over central bank independence.
"The accusations against Cook are a clear warning to other FOMC members to bow to government pressure for substantial rate cuts ... This makes gold investments more attractive in such an environment," Commerzbank said in a note, referring to the Federal Open Market Committee.
Attention now turns to U.S. nonfarm payrolls data on Friday for cues on the size of a September rate cut. A weak job print this week could reignite the conversation around the possibility of a 50 bps rate cut at the meeting, said Zain Vawda, analyst at MarketPulse by OANDA.
"I do not think this will happen, even if we get a poor NFP print, but market participants may start to price in the possibility, and that could fuel the gold rally," Vawda added.
ETF inflows are reinforcing the rally. SPDR Gold Trust , the world's largest gold-backed ETF, said its holdings rose 1.01% on Friday to 977.68 tons, the highest since August 2022.
Spot silver was down 0.5% at $40.48 per ounce, after hitting its highest since September 2011 earlier in the session.
Platinum lost 0.7% to $1,389.75 and palladium fell 1.4% to $1,121.75.
Reporting by Anmol Choubey, Anushree Mukherjee and Sherin Elizabeth Varghese in Bengaluru; Editing by Rod Nickel
