Gold Nears Record as Inflation Firms and Markets Bet on Rate Cut

Gold is ending August on a tear. Spot prices climbed back into the mid-$3,400s and are on pace for their best month since April, powered by firmer inflation, rising odds of a September Fed rate cut, and a softer dollar. In April, bullion briefly notched a record near $3,500, and the market is edging in that direction again.

What’s Driving the Move

Inflation is sticky, but markets still see easing. The latest July data showed core PCE—the Fed’s preferred gauge—up 0.3% MoM and 2.9% YoY, with headline PCE up 2.6% YoY. That’s firm enough to remind investors inflation isn’t “done,” yet not hot enough to derail expectations for a September rate cut. 

Fed-funds futures now imply roughly ~85–90% odds of a quarter-point cut next month. Lower policy rates would push real yields down—a classic tailwind for non-yielding gold.

Dollar drift helps. A softer greenback has been another quiet assist for bullion this month, with gold up about ~4–5% in August and trading to its highest levels since mid-July.

The New X-factor: Fed Independence in the Headlines

Beyond macro data, investors are watching an unprecedented legal fight in Washington that could reshape perceptions of U.S. central-bank independence.

President Trump’s attempt to remove Fed Governor Lisa Cook went before a federal judge on Friday; after a two-hour hearing, no ruling was issued, and Cook remains in her role for now. 

The case turns on what “for cause” removal means for Fed governors—an issue that’s never been litigated. Markets are sensitive because any erosion in perceived independence can boost demand for hard assets like gold.

Complicating matters, FHFA Director Bill Pulte has issued additional criminal referrals related to Cook’s mortgage disclosures—allegations Cook disputes—keeping the story in the headlines while the court weighs next steps.

Regardless of the outcome, the episode underscores a bigger theme: policy and politics are colliding, and gold tends to benefit when institutional stability is questioned.

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Silver’s Breakout Confirms the Bid for Metals

It’s not just gold. Silver has ripped to its highest level since 2011, flirting with the $39–$40 zone as investors reach for both monetary hedges and industrial-metals exposure. The white metal has been outpacing gold at times this year, a pattern often seen in strong precious-metals phases.

By the Numbers (Late August 2025)

• Spot gold: ~$3,410–$3,450/oz intraday; best month since April. Record high set April 22 near $3,500.
• Core PCE (YoY): 2.9% (July). Headline PCE (YoY): 2.6%. Personal spending: +0.5% MoM.
• Rate-cut odds: ~85–90% for September, per futures pricing.
• Silver: ~$39–$40/oz, highest since Sept 2011.

What to Watch Next

• Data cadence: CPI/PPI and jobs data in early-to-mid September will either cement or challenge the cut narrative. If inflation cools while growth holds, real yields likely drift lower—bullish for gold. If inflation surprises hot, rate-cut odds could slip, tempering the rally. (For now, markets lean toward a 25 bp cut.)
• Court developments: Any ruling—or even credible signals—on Cook v. Trump that alters perceptions of Fed independence could spark safe-haven flows (in either direction).

Investor Takeaways

Gold’s setup is fundamentally about real rates: with core inflation at 2.9% year over year and a policy bias toward easing, real yields are likely to grind lower, which supports higher gold prices.

Silver can amplify these moves—its momentum often outpaces gold in upswings, but its pullbacks are typically sharper, so position sizing matters. And politics is now a market variable; the legal fight around the Fed adds a non-economic catalyst that’s hard to handicap but generally supportive for gold when confidence in institutions wobbles.