Gold prices have surged to a new record, surpassing $US4,200 an ounce, while silver also experienced a significant boost. This rally is largely attributed to escalating tensions between the United States and China, coupled with growing expectations that the Federal Reserve will implement two more interest rate cuts before the year concludes.
Spot gold climbed as much as 1.8 per cent to peak at $4,218.29 on Wednesday (Thursday AEDT). Silver also advanced, gaining as much as 3.2 per cent. Meanwhile, the availability of silver in the London market remained constrained, contributing to price volatility. Earlier in the week, silver prices surged to an all-time high above $53.55 an ounce before experiencing a sharp decline.
Yields on US Treasuries have fallen to multi-month lows after Federal Reserve Chair Jerome Powell hinted at another quarter-point rate cut later this month. Lower yields and reduced borrowing costs generally support precious metals, as they do not offer interest payments. Heightened risk aversion, triggered by President Trump’s renewed trade threats against China, further bolstered gold’s safe-haven appeal. Beijing has vowed to retaliate after Washington threatened additional tariffs.
Liquidity issues in London have gripped the silver market, triggering a worldwide search for the metal. This shortage has driven benchmark prices above futures in New York. The gap between the two markets was approximately $1.09 an ounce on Wednesday. The four main precious metals have seen gains between 59 per cent and 83 per cent this year, dominating commodity markets. Central bank buying, rising exchange-traded fund holdings, and Federal Reserve rate cuts have underpinned gold’s advance.
