Gold prices extend record rally on Fed cut bets, U.S.-China tensions

Investing.com-- Gold prices rose to fresh record highs Thursday, marking a fourth straight session of all-time highs, as rising expectations for U.S. Federal Reserve rate cuts and renewed U.S.-China trade tensions lifted demand for the safe-haven metal.

At 08:55 ET (12:55 GMT), spot gold rose 0.7% to $4,238.22 per ounce, after reaching as high as $4,241.99 earlier in the session. U.S. gold futures climbed 1.2% to $4,250.56 an ounce.

The metal has gained more than 5% so far this week, building on a strong rally since early October.

Fed easing bets, U.S.-China tensions boost gold

Traders are now pricing in a near-certain 25 basis-point rate cut by the Fed in October, followed by another in December, after Chair Jerome Powell struck a more dovish tone in remarks this week.

The Federal Reserve’s Beige Book, released on Wednesday, showed that U.S. economic activity was little changed in recent weeks, with businesses citing slower demand and lingering cost pressures. The report also noted early signs of cooling in the labor market.

The subdued tone supported expectations that the Fed will move to support growth, further boosting gold’s appeal as yields retreat.

Gold’s gains were also underpinned by escalating U.S.-China trade tensions, after Washington threatened new tariffs on Chinese-made goods and Beijing expanded export controls on rare earth materials.

The renewed friction stoked fears of a broader trade conflict, driving investors toward safe-haven assets.

Meanwhile, the protracted U.S. government shutdown, now in its third week, added another layer of uncertainty. The impasse has delayed key economic data releases and raised concerns over fiscal dysfunction in Washington.

"Gold and silver are two of the best-performing commodities this year, with prices up by more than 55% and 80% YTD [year-to-date], respectively, supported by central bank purchases and inflows into ETF holdings. Safe-haven demand has been fuelled by persistent U.S.-China trade tensions, threats to Fed independence, and the ongoing U.S. government shutdown," said analysts at ING, in a note.

ANZ sees gold reaching $4,400/oz by year-end

ANZ analysts said that gold’s rally is likely to continue amid mounting geopolitical and economic uncertainty and the U.S. Federal Reserve’s policy easing.

"While comparisons are being made to the 1980’s price peak, the current price rise is underpinned by structural drivers, indicating that elevated prices will likely sustain," analysts wrote.

ANZ expects prices to reach $4,400 by the end of 2025 and peak near $4,600 by June 2026 before easing in the second half of that year.

Other metal markets subdued

Other precious and industrial metals moved in tight ranges on Thursday, even as the U.S. dollar weakened.

Silver prices edged 1.4% higher to $52.090 per ounce, just below record highs of $53.60 reached earlier this week. .

"The factors driving gold are also supporting silver’s momentum. Investors who missed the rally in gold prices are now turning their attention to the white metal for exposure," ANZ analysts added.

Platinum Futures rose 1.5% to $1,713.15/oz.

Benchmark Copper Futures on the London Metal Exchange slipped 0.9% to $10,529.00 a ton, while U.S. Copper Futures slipped 1.1% to $4.9570 a pound.

Ayushman Ojha contributed to this article