Gold soared to an all-time high on Thursday as investors sought refuge in the metal amid persistent geopolitical and economic uncertainties, fueled by expectations of U.S. interest rate cuts and a weakening dollar. Spot gold experienced an increase of 0.4%, reaching $4,224.79 per ounce as of 0033, following a peak of $4225.69. Gold futures in the U.S. for December delivery rose by 0.9%, hitting a price of $4,239.70. Bullion, often seen as a safe haven during uncertain times, has seen an impressive 61% rise year-to-date, especially flourishing in a low-interest-rate environment. The U.S. dollar index saw a minor drop of 0.1%, remaining near a one-week low, making dollar-priced gold more accessible for buyers around the world.
On Wednesday, U.S. officials voiced worries about China’s recent move to tighten rare earth export controls, describing these actions as a possible risk to global supply chains and suggesting that retaliatory measures could be on the table. This week, the U.S. and China introduced mutual port fees on ships from both countries, escalating the tensions in the ongoing trade conflict. Bessent noted that Washington had additional measures at its disposal, such as export controls, should Beijing take further action. Additionally, the U.S. was ready to implement tariffs on China’s acquisitions of Russian oil, depending on the involvement of European allies.
The federal government shutdown, now in its second week, is expected to lead to a daily loss of $15 billion in output for the U.S. economy, based on Bessent’s statement on Wednesday. A federal judge in California has ordered the Trump administration to stop mass layoffs of federal employees during the ongoing partial shutdown. The recent surge in gold prices can be attributed to several factors: increased geopolitical tensions, expectations of interest rate cuts, a rise in central bank purchases, shifts towards reducing reliance on the dollar, and significant investments in gold-backed exchange-traded funds. Investors are anticipating a likely 25-basis-point rate reduction at the upcoming Federal Reserve meeting, with another cut expected in December.
On Wednesday, holdings of the largest gold-backed ETF experienced a modest increase of 0.11%, reaching 1,022.60 tonnes compared to the previous day. Spot silver increased by 0.2% to $53.16 per ounce, following a record high of $53.60 on Tuesday, influenced by the rally in gold and a short squeeze in the market. Elsewhere, platinum increased by 0.7% to $1,665.70, while palladium experienced a decline of 0.3% to $1,540.36. Gold hits a remarkable high as investors turn to secure assets.