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Silver surpasses record levels of $4,000 and gold

Gold prices were above $4,000 per ounce as investors analyzed the Israel-Hamas truce deal. Meanwhile, broader geopolitical uncertainty and expectations of U.S. interest rate cuts fueled bullish sentiment.

Silver reached a new record, thanks to gold's record-breaking rally. Investor demand, as well as a deficit in supply, also helped.

At 1132 GMT, spot gold remained unchanged at $4.038.49 an ounce. U.S. Gold Futures for December Delivery fell 0.3% to $4,577.80.

On Wednesday, gold prices rose to a record $4,059.05.

Silver rose 1.5% to $49.63 an ounce. This metal has gained more than 70% in this year. It is benefiting from factors similar to those that have driven gold's rally, as well as the tightness of the spot market.

"The silver market has an interesting feature: the net long positions have only slightly increased, so this rally is not driven by speculative interests. This move in silver's price is based on some solid fundamentals, according to independent analyst Ross Norman.

U.S. president Donald Trump announced a ceasefire agreement and hostage swap between Israel and Hamas as part of the first phase in his plan to end Gaza's war.

The gold rally faces resistance due to the Gaza diplomatic breakthrough, which reduces risk-off flow, and the ongoing U.S. Dollar recovery, which undermines the bullion's power, making it vulnerable for pullbacks, said Nikos Tzabouras Senior Market Analyst at Tradu.

The path to new highs remains wide open.

The U.S. Dollar Index hovered at a high of two months, making bullion priced in dollars more expensive for buyers from overseas.

Gold's rise has been attributed to geopolitical factors, such as the Middle East conflict and the war in Ukraine. Also, ETF flows, U.S. interest rate cuts, and tariff-related economic uncertainty have contributed.

The metal is set to have the biggest annual gain since 1979, with a 53% increase year-to date.

According to the minutes of their meeting on September 16-17, Federal Reserve officials were in agreement that the risks facing the U.S. employment market warranted a rate reduction, but they remained cautious due to stubborn inflation.

The markets are pricing in a cut of 25 basis points in October and December.

UBS stated in a report that "the ongoing U.S. shutdown has given (gold) a boost, along with mounting fiscal concerns in Japan & France due to recent political leadership change."

Gold that does not yield is a good investment in low-interest-rate environments and times of geopolitical and economic uncertainty.

Lukman Otunuga is a senior research analyst with FXTM. He said that if risk sentiment continues improving, gold prices may fall in the short term as investors rush to riskier assets.

Palladium rose 1.9% to $1476.76 and platinum increased 0.1% to $1663.71. This is a record high for more than two years.

(source: Reuters)