Gold Surpasses $4,100 Amid Trade Tensions
On Monday, gold prices soared above $4,100 an ounce for the first time, reaching a new peak driven by renewed tensions in U.S.-China trade relations and speculation about interest rate cuts. Silver also saw a significant rise, hitting an all-time high.
During afternoon trading, spot gold increased by 2.2%, settling at $4,106.48 after briefly touching $4,116.77. Meanwhile, gold futures for December advanced by 3.3% to close at $4,133.
This year, gold has surged 56%, with the $4,000 mark crossed for the first time just last week. This surge stems from various factors, including geopolitical risks, economic uncertainties, and robust demand from central banks.
Philippe Streible, chief market strategist at Blue Line Futures, noted that gold could maintain its upward trajectory, suggesting prices might surpass $5,000 by the end of 2026.
He mentioned ongoing central bank purchases, healthy ETF inflows, and the potential for lower interest rates as significant support for the gold market.
In the geopolitical arena, President Trump reignited trade tensions with China last Friday, disrupting a fragile truce between the two largest economies.
Traders are currently anticipating a 97% probability that the Federal Reserve will enact a 25 basis point interest rate cut in October, with a 100% certainty for December. Traditionally, gold, which does not yield interest, performs well in environments with low interest rates.
Analysts from Bank of America and Societe Generale predict that gold could hit $5,000 by 2026, with Standard Chartered adjusting its 2024 forecast to an average price of $4,488.
Suki Cooper, global head of commodity research at Standard Chartered, stated that while there is plenty of support for the gold rally, a short-term correction could ultimately benefit the long-term upward trend.
Physical silver rose 3.1%, reaching $51.82, and even hit a record of $52.12 earlier in trading, bolstered by similar factors affecting gold and physical markets.
Technical indicators suggest that both gold and silver are currently overbought, with relative strength indexes (RSI) showing 80 for gold and 83 for silver.
Additionally, platinum increased by 3.9% to $1,648.25, while palladium rose by 5.2% to $1,478.94.
