Gold hits a record high above $3,600 on strong demand

Spot gold was trading around $3,637.39 for a gain of more than 38% so far this year

Gold hit a record high above $3,600 an ounce on Tuesday, spurred by expectations of U.S. interest rate cuts, concerns about central bank independence and robust demand from investors and central banks.

Having hit a record high at $3,673.95 a troy ounce, spot gold was trading around $3,637.39 by 1524 GMT for a gain of more than 38% so far this year.

Analysts expect gold to trade in a $3,600-$3,900 range in the near to medium term and see potential for it to test $4,000 next year if economic and geopolitical uncertainties persist.

Supportive for gold is the bearish dollar outlook underpinned by expectations of Fed cuts, investors distancing from U.S. assets and tariff-related economic uncertainty, according to Ricardo Evangelista, senior analyst at ActivTrades.

The U.S. currency has dropped nearly 11% since President Donald Trump returned to the White House in January. Expectations of more rate cuts will further undermine the country’s currency, which makes dollar-denominated gold cheaper for holders of other currencies when it drops.

Traders see a 92% probability of a 25-basis-point rate cut in September when the central bank meets, according to the CME Group’s FedWatch tool.

Among other factors fortifying gold’s appeal are security concerns emanating from the Middle East and between Russia and Ukraine. Central bank gold purchases such as those by China have also provided boost to gold prices.

According to the World Gold Council, central banks plan to raise the gold portion of their reserves while lowering dollar reserves over the next five years.