MARKET INSIDER – Gold notched another all-time record high on Monday, surging past the $4,090 per ounce mark, as international investors flocked to safe-haven assets amidst renewed U.S.-China trade tensions. The metal’s allure was further amplified by firming expectations of aggressive U.S. interest rate cuts by the Federal Reserve.
Spot gold was up 1.9% as of 10:04 a.m. ET (1404 GMT), trading at $4,093.39 per ounce, after touching a new record of $4,096.35/oz earlier in the session. U.S. gold futures for December delivery reflected the bullish sentiment, surging 2.8% to $4,113.40.
Silver mirrored gold’s ascent, also hitting an all-time high, with spot prices rising 3.3% to $51.91/oz after peaking at a record $52/oz.
Macro Concerns Fueling the Rally
The historic price action comes amid a general sense of global uncertainty. “Rises in gold and silver prices happen when investors are concerned about the state of the world, either economically or politically,” said Jeffrey Christian, managing partner of CPM Group.
This sentiment was reinforced by President Donald Trump reigniting trade tensions with China on Friday, ending an uneasy truce between the world’s two largest economies.
Adding to the momentum, the non-yielding asset benefits strongly from a low-interest rate environment. Traders are currently pricing in a high probability for further cuts, with a 97% chance of a 25-basis-point Federal Reserve rate cut in October, and a 100% chance anticipated for December.
The Long-Term View: $5,000 Gold
Gold has climbed an impressive 56% this year, crossing the $4,000/oz milestone for the first time just last week. This ascent has been buoyed by geopolitical and economic uncertainties, expectations of U.S. interest rate cuts, and robust central bank buying.
Analysts are now setting ambitious long-term price targets, Bank of America and Societe Generale expect gold to reach $5,000/oz in 2026. Standard Chartered has raised its forecast to an average of $4,488/oz next year.
Suki Cooper, global head of commodities research at Standard Chartered Bank, commented, “Given the carousel of drivers, and how short-lived dips have been, this rally has legs in our view, but a near-term correction would be healthier for a longer-term uptrend.”
Silver, supported by the same macro factors and spot market tightness, is also expected to appreciate further. Goldman Sachs stated on Sunday that it expects silver prices to rise in the medium term, driven by private investment flows, though the firm warned of heightened near-term volatility.
On the technical front, indicators suggest caution, with both metals showing overbought conditions. The relative strength index (RSI) stands at 80 for gold and 83 for silver.
The rally extended to other precious metals, with platinum rising 4% to $1,651.20 and palladium gaining 4.3% to $1,465.97.
