Gold prices soared to a record high on Tuesday, fueled by rising U.S.-China trade tensions that heightened overall uncertainty, increasing demand for safe-haven assets. At the same time, the expectation of U.S. rate cuts offered extra backing, leading silver to reach a historic high. Spot gold increased by 0.4% to $4,124.79 per ounce at 0029, following an all-time high of $4,131.52 reached earlier in the session. Gold futures in the U.S. for December delivery rose by 0.3%, hitting a price of $4,143.10.

Gold has seen an impressive rise of 57% this year, surpassing the notable $4,100 mark for the first time on Monday. This surge is driven by a mix of geopolitical and economic uncertainties, anticipated rate cuts, strong central bank purchases, and significant inflows into ETFs. Spot silver saw a rise of 0.3%, hitting $52.49 per ounce, after peaking at $52.70 earlier in the day, supported by the same factors affecting gold and a tightening in the spot market. U.S. President Donald Trump is set to meet with Chinese leader Xi Jinping in South Korea in late October, as noted by U.S. Treasury Secretary Scott Bessent on Monday. Recent tensions escalated when China announced on Thursday its plans to expand rare-earth export controls. In response, Trump threatened to impose a 100% tariff on Chinese imports and to enforce export controls on crucial U.S.-made software starting November 1.

The U.S. federal government shutdown, now entering its 13th day, is starting to affect the nation’s economy, according to Bessent. Analysts predict that gold will hit $5,000 by 2026, while Standard Chartered has raised its average forecast for that year to $4,488. Meanwhile, Philadelphia Federal Reserve chief Anna Paulson indicated that rising risks to the labor market bolster the case for further U.S. interest rate cuts. Jerome Powell, the Chair of the U.S. Federal Reserve, is set to address the NABE annual meeting on Tuesday, which could provide fresh perspectives on rate cuts.

Investors continue to hold their expectations for a 25-basis-point rate cut at the upcoming Fed meeting this month, with a similar decrease expected in December. SPDR Gold Trust, known as the largest gold-backed exchange-traded fund in the world, announced a rise in its holdings by 0.17%, totaling 1,018.88 tonnes on Monday compared to Friday. Elsewhere, platinum increased by 0.5% to $1,653.45, while palladium rose by 1.6% to $1,498.25, reaching its highest level since May 2023.