Gold price extends record on US-China tensions and Fed rate-cut bets

 

Gold rose to a record as heightened US-China frictions and bets that the Federal Reserve will press on with monetary easing supported demand.

 

 

Bullion has risen more than 5% so far this week and touched a peak above $4,243 an ounce on Thursday, extending a breakneck rally that began in August. The buying spree has spread to other precious metals, with silver surging more than 3% on Wednesday as the London market remained tight.

 

Traders are piling into wagers on at least one outsized US rate cut by year-end, while Fed Chair Jerome Powell signaled this week the central bank is on track to deliver another quarter-point reduction later this month. Lower borrowing costs tend to benefit precious metals, which don’t pay interest.

 

President Donald Trump declared Wednesday that the US was now locked in a trade war with China, spurring fears of prolonged damage to the global economy that could boost gold’s haven appeal.

 

The ongoing US government shutdown has also aided bullion, as has the so-called debasement trade, where investors pull away from sovereign debt and currencies to protect themselves from runaway budget deficits. Enthusiastic central bank buying and inflows to exchange-traded funds have also underpinned gold’s 60% surge this year.

 

“Nothing has changed for me: For the last $2,000 per ounce we’ve been bullish and everything that’s taken us here is still bullish,” Michael Widmer, head of metals research at Bank of America Corp., told Bloomberg Television. Nevertheless, “ETF inflows last month were up 880% year-over-year and that is ultimately a concern,” since it’s unsustainable.

 

The silver market, meanwhile, has been gripped by a lack of liquidity in London, sparking a worldwide hunt for the metal and driving benchmark prices to soar above futures in New York. Prices touched a record above $53 an ounce this week, before edging lower on Thursday.

 

Over the past week, more than 15 million ounces of silver have been withdrawn from warehouses linked to the Comex futures exchange in New York. Much of that is likely headed to London, where it should help ease market tightness — though solid ETF inflows of almost 11 million ounces over that period have further eroded London stocks.

 

Spot gold was up 0.8% at $4,241.20 an ounce as of 11:16 a.m. in London. Silver edged lower. The Bloomberg Dollar Spot Index dipped 0.2%, falling for a third day. Palladium and platinum gained. 

https://www.mining.com/web/gold-price-extends-record-on-us-china-tensions-and-fed-rate-cut-bets/