Gold hits record high on Fed rate-cut bets, US-China trade woes
Investors are pricing in a near-certain chance of a 25-basis-point Fed rate cut in both October and December
[BENGALURU] Gold rose to a fresh high just shy of the US$4,200-per-ounce level on Wednesday (Oct 15), buoyed by rising expectations of further US rate cuts, while renewed US-China trade worries also boosted safe-haven demand.
Spot gold was up 0.8 per cent at US$4,173.56 per ounce, as at 10.52 am, after hitting a record high of 4,186.68 earlier in the session. US gold futures for December delivery gained 0.7 per cent to US$4,192.90.
US President Donald Trump said on Tuesday that his administration planned to produce a list on Friday of “Democrat programmes” that will be closed as a result of the federal government shutdown.
“The US government shutdown and dovish comments from Jerome Powell have provided the latest reasons for gold prices to accelerate higher,” said StoneX senior analyst Matt Simpson.
US Federal Reserve chair Jerome Powell said that the US labour market remained subdued, though the economy “may be on a somewhat firmer trajectory than expected”.
Powell said that interest rate decisions would be made on a “meeting-by-meeting” basis, balancing labour market weakness with persistent inflation above target.
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Investors are pricing in a near-certain chance of a 25-basis-point Fed rate cut in both October and December.
Bullion tends to do well in a low interest rate environment and during times of political and economic uncertainties.
Safe-haven gold has gained 59 per cent year-to-date, driven by multiple factors, including geopolitical and economic uncertainties, expectations of US rate cuts, strong central bank buying, de-dollarisation trend and robust exchange-traded fund inflows.
“This rally has also become a momentum trade, where traders pile in simply to chase prices getting away from them,” Simpson said.
Trump said Washington was considering cutting some trade ties with China, including in cooking oil. Both countries began imposing tit-for-tat port fees on Tuesday.
The International Monetary Fund raised its 2025 global growth forecast, citing better-than-expected tariff and financial conditions, while cautioning that renewed US-China trade tensions could curb growth.
Silver rose 0.3 per cent to US$51.60, after having hit a record high of US$53.60 on Tuesday, tracking gold’s rally and on tightening supply in the spot market.
Elsewhere, platinum climbed 0.8 per cent to US$1,650.65 and palladium rose 0.2 per cent to US$1,528.50. REUTERS
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