Gold tops $4,300 amid rate cut bets, eyes biggest weekly gain since 2008

Gold surged past $4,300 an ounce on Friday, headed for its biggest weekly gain since December 2008, as geopolitical and economic uncertainty along with growing U.S. rate cut bets drove investors to the safe-haven metal.

Spot gold rose 0.2% to $4,335.87 per ounce, as of 0929 GMT, after scaling another record high of $4,378.69 earlier. U.S. gold futures for December delivery jumped 1% to $4,348.90.

Gold is set for a gain of about 8.1% so far this week. Earlier in the session, gold had temporarily been on track for its biggest gain since September 2008 when the collapse of Lehman Brothers fuelled the global financial crisis.

"With rate-cut expectations, geopolitical risks, and lingering banking concerns all in play, the environment remains highly supportive for gold," said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany.

"Short-term consolidation is possible given the overbought conditions."

On a technical basis, gold's Relative Strength Index (RSI) stands at 88, indicating the metal is overbought.

Spot silver fell 0.5% to $53.96 per ounce, after hitting a record high of $54.47, tracking the rally in gold and a short squeeze in the spot market. The metal is set for a 7.3% weekly gain.

Tumbling bank shares pulled global stocks lower on Friday, while gold hit a fresh peak, as signs of credit stress at U.S. regional lenders unnerved investors and drove them into safe-haven assets. [MKTS/GLOB]

U.S. Federal Reserve Governor Christopher Waller voiced support for another rate cut. Investors are expecting a 25-basis-point reduction at the Fed's October 29-30 meeting and another reduction in December.

Meanwhile, China levelled fresh accusations against the U.S. of causing panic over its rare earth controls, while rejecting calls to reverse export curbs.

Gold, a traditional hedge against uncertainty and inflation that thrives in low-rate environments, has surged over 66% this year, driven by geopolitical tensions, rate cut bets, central bank buying, de-dollarisation and robust exchange-traded-fund inflows.

"I believe resilient and huge ETF flows are pulling prices up," said Michael Haigh, global head of commodities research at Societe Generale.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose to 1,034.62 tonnes on Thursday, its highest level since July 2022.

Platinum fell 3.3% to $1,656.90 and palladium lost 2.9% to $1,566.30.