Gold prices soared to a new all-time high surpassing $4,100 on Tuesday, driven by mounting expectations of an imminent rate cut by the US Federal Reserve and increased safe-haven demand amid escalating trade tensions between the world’s top two economies. The spot gold price climbed by 0.5 percent to $4,128.49 per ounce by 0805 GMT, reaching a peak of $4,179.48 earlier in the trading session. Meanwhile, US gold futures for December delivery also saw a 0.3 percent increase, settling at $4,144.10.
The precious metal has witnessed a remarkable 57 percent surge since the beginning of the year, breaching the significant $4,100 threshold for the first time on Monday. This surge can be attributed to various factors such as geopolitical and economic uncertainties, anticipations of rate cuts, substantial central bank purchases, and robust inflows into exchange-traded funds.
Han Tan, the chief market analyst at Nemo.money, noted that concerns revolving around a global trade conflict have propelled gold above the psychological barrier of $4,100. Tan further suggested that a further uptrend towards the mid-$4k range might necessitate dovish surprises emerging from the upcoming Federal Open Market Committee (FOMC) meeting.
US President Donald Trump is scheduled to meet with Chinese leader Xi Jinping in South Korea later in October, as confirmed by US Treasury Secretary Scott Bessent. Simultaneously, amidst escalating trade talks between the US and China, both nations are set to impose port fees on maritime shipping companies transporting goods ranging from holiday products to crude oil.
Forecasts from analysts at Bank of America and Societe Generale anticipate that gold could reach $5,000 per ounce by 2026. In contrast, spot silver experienced a slight dip of 0.1 percent to $52.27 after hitting a record peak of $53.60. Silver’s performance remains bolstered by similar factors driving gold prices and tightness in the spot market.
Tan highlighted that the recent surge in silver prices can be attributed to a short squeeze in London, complemented by the broader safe-haven appeal. Investors are eagerly awaiting insights into the Federal Reserve’s monetary policy trajectory from Fed Chair Jerome Powell’s speech at the NABE annual meeting on Tuesday. Additionally, Philadelphia Federal Reserve chief Anna Paulson emphasized that mounting risks to the labor market have strengthened the argument for further interest rate cuts in the US.