PRECIOUS-Gold adds to record rally as rate-cut bets, trade turmoil lift demand

By Ishaan Arora

Sept 3 (Reuters) - Gold hit another record high on Wednesday, consolidating gains above the $3,500 level on growing expectations of a Federal Reserve rate cut this month and concerns over U.S. tariff policy and the independence of its central bank.

Spot gold XAU= was up 0.4% at $3,547.27 per ounce as of 1132 GMT, after hitting an all-time high of $3,549.53 earlier in the session. U.S. gold futures GCcv1 for December delivery gained 0.6% to $3,613.30.

Adding to market uncertainty and potential trade tensions, U.S. President Donald Trump's administration said it will ask the Supreme Court for an expedited ruling on tariffs that a U.S. appeals court found to be illegal last week.

"The tariff issues and roadblock provided by the Supreme Court will be a critical test for Trump, (and) irrespective of the outcome, gold provides a welcome respite from market turbulence for investors," said independent analyst Ross Norman.

"Rate cuts are starting to look baked in, but questions are now arising whether there will be further cuts. Lower rates would stimulate economic activity in the U.S. as well as further weaken the dollar... providing a strong tailwind to gold."

Trump has been exerting relentless pressure on the Fed to cut interest rates, and publicly discussed firing Fed Chair Jerome Powell.

In a sharp escalation, Trump last month attempted to fire Fed Governor Lisa Cook, setting off a critical legal test over the Fed's ability to function without political interference.

Rate-cut expectations and worries over the Fed's independence have weighed on the U.S. dollar .DXY, which is down more than 9% since the start of the year, making gold less expensive for overseas buyers. USD/

Investors are pricing in a 92% chance of a 25 basis-point Fed rate cut at the end of its policy meeting on September 17, according to CME Group's FedWatch tool. FEDWATCH

Non-yielding gold typically performs well in a low-interest-rate environment.

"I do think given the geopolitical risk and Federal Reserve outlook, the gold rally may still have room to run in 2025," said Zain Vawda, analyst at MarketPulse by OANDA.

All focus is now on U.S. non-farm payrolls data, due on Friday, for clues on the size of the Fed's potential cut.

Analysts see spot gold in a $3,600-$3,900 range in the near to medium term, with potential to test the $4,000 level in 2026 if economic and geopolitical uncertainties persist.

Elsewhere, spot silver XAG= eased 0.1% to $40.87 per ounce after hitting its highest since September 2011. Platinum XPT= gained 0.1% to $1,404.09 and palladium XPD= rose 1.7% to $1,153.46.

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