Gold extends record run past $4,200 on rate-cut hopes, safe-haven fervor

Gold prices breached $4,200 per ounce for the first time on Wednesday, extending a record rally as rising interest rate cut bets and geopolitical jitters send investors flocking to the safe-haven metal.

Spot gold rose 1.3 per cent to $4,196.76 per ounce as of 12:33 p.m. ET (1633 GMT), after hitting an all-time high of $4,217.95 earlier. US gold futures for December delivery gained 1.2 per cent to $4,213.60.

"The metal has been on a tear, and it doesn't look like it wants to stop ... With US-China trade tensions being reignited in the last few days, investors have even more reason to hedge their long equity bets by diversifying into gold," said Fawad Razaqzada, market analyst at City Index and FOREX.com.

 

Gold has surged over 60 per cent this year, driven by a confluence of factors including geopolitical tensions, rate-cut bets, central bank buying, de-dollarisation and strong ETF inflows.

"With the $5,000 handle now just $800 away, I wouldn't bet against gold getting there eventually," Razaqzada said, adding that a short-term correction is likely to shake out weaker hands and attract fresh dip buyers.

The dollar slipped against a basket of peers after Federal Reserve Chair Jerome Powell struck a dovish tone on Tuesday, saying the US labour market remained mired in "low-hiring, low-firing doldrums." [USD/]

Gold is considered a traditional hedge against uncertainty and inflation, and also thrives in low-rate environments as it is a non-yielding asset.

Traders are pricing in a 25-basis-point rate cut in October, with a 98 per cent probability, followed by another cut in December, which is fully priced in at 100 per cent..

Adding to the safe-haven bid, US President Donald Trump said Washington was considering cutting some trade ties with China after both sides imposed tit-for-tat port fees this week.

Markets are also watching the US government shutdown, which has halted official data and may cloud policymakers' outlook abroad.

Silver climbed 2.2 per cent to $52.59, following Tuesday's record high of $53.6.

Silver's surge is driven by a tight London supply, marked by extreme backwardation and record lease rates, but it could reverse quickly if shortages ease, said Michael Brown, senior strategist at Pepperstone.

Elsewhere, platinum climbed 0.9 per cent to $1,653.03 and palladium rose 0.6 per cent to $1,534.75.