Gold Prices Reach New Heights Exceeding $4,227 an Ounce

SadaNews - Gold has reached a new record level amid rising tensions between the United States and China, and increasing bets that the U.S. Federal Reserve will maintain its monetary easing policy until the end of the year, thus boosting demand for the precious metal.

Gold has risen nearly 5% since the beginning of the week, hitting a new peak of over $4,227 an ounce on Thursday, continuing the rapid increase that began in mid-August. The buying wave extended to other precious metals, with silver rising by more than 3% on Wednesday amid tight supply in the London market.

Traders are betting on at least one significant cut in U.S. interest rates by the end of the year, as Federal Reserve Chairman Jerome Powell indicated this week that the central bank is on track to approve a new reduction of a quarter percentage point later this month. Low borrowing costs are supportive of gold and precious metals as they do not yield interest.

The announcement by U.S. President Donald Trump that the country has entered into a trade war with China has heightened fears of long-term damage to the global economy, which has increased gold's appeal as a safe haven, even as Treasury Secretary Steven Mnuchin suggested extending the wait period before imposing additional tariffs.

The U.S. Government Shutdown Boosts Price Increases

The partial shutdown of the U.S. government has contributed to increased demand for gold, alongside what is known as a "currency devaluation deal", as investors turn away from sovereign debts and currencies to protect their assets from rising fiscal deficits. Large purchases by central banks have also supported the rise, with gold prices jumping more than 60% since the beginning of the year.

Saad Rahim, chief economist at Trafigura, stated that a significant part of the current upward trend is "driven by physical buying, and if you look at the central banks, they are purchasing massive quantities." He added that concerns over debt sustainability and rate cut prospects are pushing investors toward gold as a store of value and safe haven.

Spot gold rose by 0.3% to $4,218.74 an ounce at 8:48 AM in Singapore, while the Bloomberg Dollar Index fell by 0.2% for the third consecutive day. Platinum remained stable, while palladium saw a slight increase.

Meanwhile, the silver market is suffering from a liquidity shortage in London, leading to a global rush to buy the metal, pushing spot prices above futures contracts in New York. Prices reached a record level of over $53 an ounce this week, stabilizing with little change on Thursday.