Expectations of U.S. rate cuts and a declining dollar provided support for gold’s record high on Thursday as investors sought solace in the commodity despite ongoing geopolitical and economic worries.
Gold Prices Reach Record
* After reaching a new high of $4225.69 per ounce, spot gold increased 0.4% to $4,224.79 per ounce as of 0033 GMT.
* December delivery U.S. gold futures up 0.9% to $4,239.70.
* Bullion, which has risen 61% so far this year and is often seen as a safe-haven asset during difficult times, performs well in an environment with low interest rates.
Dollar Weakens, Boosts Gold
* The U.S. dollar index fell 0.1%, closing close to a one-week low and lowering the cost of dollar-priced gold for overseas purchasers.
Trade Tensions Escalate Again
* On Wednesday, U.S. officials described China’s increased export restrictions on rare earths as a danger to global supply chains and hinted at possible retaliation actions.
* Earlier this week, tensions in the current trade war escalated as the United States and China implemented reciprocal port taxes on each other’s ships.
U.S. Policy and Shutdown
* Bessent said Washington was prepared to impose tariffs on China for its imports of Russian oil, provided European allies joined in, and that it had further tools at its disposal, such as export curbs, should Beijing go forward.
* Bessent said on Wednesday that the U.S. economy might lose $15 billion per day due to the federal government shutdown, which is now in its second week.
* During the partial shutdown, a federal court in California has ordered the Trump administration to stop mass layoffs of federal employees.
Factors Driving Gold Boom
* A number of reasons have contributed to the gold boom, including de-dollarization, rising central bank purchases, geopolitical threats, anticipation of interest rate decreases, and strong inflows into exchange-traded funds (ETFs) backed by gold.
* Investors expect the Federal Reserve to drop interest rates by 25 basis points this month, and then again in December.
* Compared to Tuesday, the SPDR Gold Trust’s holdings, the biggest gold-backed ETF, rose 0.11% to 1,022.60 tonnes on Wednesday.
Silver and Other Metals
* Following the surge in gold and the short squeeze in the spot market, spot silver was up 0.2% at $53.16 an ounce after reaching a new high of $53.60 on Tuesday.
* In other news, palladium fell 0.3% to $1,540.36, while platinum increased 0.7% to $1,665.70.
Key Economic Events
Information/Events (GMT)
0430 NSA Aug. Japan Tertiary Ind Act
0600 UK GDP Est 3M/3M Aug
0600 MM, YY Aug UK GDP Estimate
YY Aug, 0600 UK Services MM
0600 MM Aug UK Manufacturing Output
0900 SA Aug EU Total Trade Balance
1230 Fed Business Index for the US Philly in October
US PPI Machine Manufacturing 1230 September
US Retail Sales MM September 1230