Gold Hits Record High Amid Safe-Haven Demand and Rate-Cut Bets

Oct 16— Gold prices extended their rally to a new record high on Thursday as investors sought the safe-haven asset amid U.S.-China trade tensions and the ongoing U.S. government shutdown, with expectations of interest rate cuts adding further support.

Spot gold rose 0.7% to $4,235.41 per ounce as of 1012 GMT, earlier touching $4,243, marking a fifth consecutive session of gains.

Investors have been focused on the trade spat between the world’s largest economies. U.S. officials criticized China for expanding rare-earth export controls, warning that it could disrupt global supply chains.

“Renewed trade frictions are adding to uncertainty across global supply chains… investors are increasingly turning to gold,” said Nitesh Shah, commodities strategist at WisdomTree. He added that gold’s breakout also reflects concerns over U.S. policy credibility.

 (Reuters) 

Factors driving the rally include expectations of interest rate cuts, political and economic uncertainty, central bank purchases, inflows into gold ETFs, and a weak U.S. dollar. Traders are pricing in a 25 basis-point cut by the Federal Reserve in October and another in December, with probabilities of 98% and 95%, respectively.

Meanwhile, the ongoing U.S. government shutdown could cost the economy up to $15 billion a week, according to a Treasury official.

Silver, platinum, and palladium also moved: spot silver fell 0.4% to $52.88, platinum rose 0.9% to $1,669.60, and palladium edged up 0.3% to $1,540.25.