LONDON (FN) — Gold surged to another record high Thursday, extending a five-day rally as investors flocked to the safe-haven asset amid escalating U.S.-China trade tensions and a prolonged U.S. government shutdown. Expectations of interest rate cuts further fueled demand.
Spot gold rose 0.8% to 4,242 Dollars and 38 cents per ounce by midday GMT, after earlier touching an all-time high of 4,247 Dollars and 49 Cents. U.S. gold futures for December delivery climbed 1.4% to 4,258 Dollars and 50 cents, continuing a powerful upswing that has lifted prices 60% year-to-date.
The rally comes as Washington criticized Beijing’s expansion of rare earth export controls, deepening concerns over global supply chains. Investors are increasingly turning to gold as a hedge against geopolitical and economic instability.
“Renewed trade frictions are adding to uncertainty across global supply chains,” said Nitesh Shah, commodities strategist at WisdomTree. He noted that gold’s breakout also reflects growing unease over U.S. policy credibility, with prices likely to remain above 4,200 Dollars.
Multiple factors are driving the surge, including anticipated interest rate cuts, central bank buying, inflows into gold-backed exchange-traded funds, and a weakening dollar. Non-yielding gold typically benefits in low-rate environments.
Traders are pricing in a 25 basis-point cut by the U.S. Federal Reserve in October, with another expected in December. Market odds for both cuts stand at 98% and 95%, respectively, according to futures data.
The ongoing U.S. government shutdown, now in its second week, may cost the economy up to 15 billion Dollars per week in lost output, a Treasury official warned Wednesday, adding further pressure on policymakers.
Aakash Doshi, head of gold metals strategy at State Street Investment Management, said prices could reach 5,000 Dollars by 2026 if physical demand remains steady and financial allocations continue to rise.
India, the world’s second-largest gold consumer, is seeing a spike in smuggling ahead of key festivals, driven by record prices and supply shortages. Margins for illicit trade have widened, making underground channels more lucrative.
