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Gold reaches new records as Fed rate-cut betting drives gold to record highs

Gold reaches new records as Fed rate-cut betting drives gold to record highs

Gold reached a record-high for the fourth consecutive session on Thursday as investors flocked into the metal of safety due to brewing U.S. China trade tensions, and the U.S. Government shutdown. Bets on interest rates cuts also fueled the momentum.

As of 09:10 am, spot gold was up by 0.8% to $4,242.65 an ounce. ET (1310 GMT), after bullion reached a record high earlier of $4,254.61.

U.S. Gold Futures for December Delivery were up 1.3% to $4,256.70.

Yellow metal is up over 60% in the past year, thanks to geopolitical tensions and aggressive bets on rate cuts, central bank purchases, dedollarisation, and strong ETF flows.

The rate-cut scenario heading into 2026, as well as developments surrounding U.S. China will determine the trajectory of gold. "If no deal is made between the U.S. and China, the relationship will continue to deteriorate. That could be what gold needs to break the barrier of $5000/oz," said Zain Vwda. Analyst at MarketPulse.

This week, investors have been focused on the U.S.-China Trade Spat. Washington criticised China's increased rare earth export controls on Wednesday as a danger to global supply chains.

Traders have priced in a rate cut of 25 basis points by the U.S. Federal Reserve in October and a second in December with probabilities as high as 98% and 95%.

Gold that does not yield is usually a good investment in an environment with low interest rates.

Vawda stated that short-term gold pullbacks are likely to be temporary as bullish investors use dips to enter positions.

HSBC increased its forecast for the average price of gold in 2025 to $3,355 per ounce, citing geopolitical tensions and economic uncertainty, as well as a weaker U.S. Dollar.

The ongoing U.S. shutdown has also halted the release of scheduled economic data. A Treasury official warned that the loss in output could be as high as $15 billion per week.

Silver spot fell by 0.2%, to $52.96 an ounce. It had hit a record high $53.60 per ounce on Tuesday. The rally in gold was mirrored and the tightness of the spot market supported this decline.

Palladium rose 1.8%, to $1,564.00, while platinum was up 0.7% at $1,665.24. (Reporting and editing by Vijay Kishore in Bengaluru, Sherin Elizabethvarghese from Bengaluru)

(source: Reuters)