US Fed risks recession without more interest rate cuts, says Miran

Gold crossed the $4,400-per-ounce level for the first time on Monday, propelled by expectations of US rate cuts and ‍continued safe-haven buying, while silver followed ​suit, soaring to a new record high.

Spot gold climbed 2 per cent to hit a new record high at $4,426.66 per ounce as of 1313 GMT. US gold futures for February delivery rose 1.5 per cent to $4,451.60 per ounce.

Bullion has surged nearly 68 per cent this year, marking its biggest annual rise since 1979, fuelled by strong central bank buying, safe-haven flows, and lower interest rates.

Spot ​silver climbed 3.1 per cent to $69.18 after hitting a new record high of $69.44 earlier in the session.

 

Silver has risen 139 per cent year-to-date, driven by an ongoing supply deficit, growing industrial needs and strong investment demand.

"Lower rates are supporting the demand for real assets like gold and silver. But we also have copper at a record high, indicating a desire by investors to hold exposure to broad commodities, likely due to expectations that inflation could stay higher for longer," said UBS analyst Giovanni Staunovo.

Federal Reserve Governor Stephen Miran reiterated Friday that the US central bank should cut interest rates because inflation has cooled and monetary policy needs to offset risks to the job market.

While gold is seen as a hedge ??against inflation and a safe asset during uncertain times, the non-yielding asset also tends to benefit in lower ‌interest rate environments.

"This is self-fulfilling momentum, but if ​there is one key fundamental element I would point to, it would be President Trump's reported use of the word 'war' last week with respect to Venezuela, ??after running on an election ticket revolving in part around the word 'peace'," StoneX analyst Rhona O'Connell ??said.

Meanwhile, ‍the U.S. dollar inched lower, and is on pace for its steepest annual decline since 2017, making gold more affordable for overseas buyers.

"Our outlook for gold remains that ‍the ‌yellow metal should ​reach even higher levels next year, with a target ‍at $4,500/oz," Staunovo added.

Elsewhere, platinum jumped 5.4 per cent to $2,079.25, hitting its highest in more than 17 years, ‍while ‍palladium climbed 2.7 per cent to $1,759.75, ‌hitting a near three-year high.

(Reporting by Pablo Sinha and Sherin Elizabeth Varghese in Bengaluru; Editing by Leroy Leo)