On Wednesday, October 15, the price of gold broke through the key threshold of $4,200 per ounce for the first time. This was driven by the increased expectations of a Federal Reserve interest rate cut, coupled with escalating tensions between the U.S. and China which boosted safe-haven demand.
As of 3:52 AM Eastern Time, spot gold rose by 1.54% to $4,205.76 per ounce. The December gold futures in the U.S. also increased by 1.44% to $4,223.46.
President Trump stated on Tuesday that his administration plans to release a list of “Democratic plans” that have been shut down due to the federal government closure.
Matt Simpson, a senior analyst at StoneX, mentioned that the U.S. government shutdown and Jerome Powell’s dovish comments have provided the latest reasons for the accelerated rise in gold prices.
Federal Reserve Chairman Powell stated that the U.S. labor market continues to be weak despite the economy potentially being on a more stable trajectory than expected.
Powell mentioned that interest rate decisions will be made on a “meeting-by-meeting” basis to find a balance between soft labor market conditions and persistent inflation above the target.
Investors are almost certain that the Federal Reserve will cut interest rates by 25 basis points each in October and December.
During periods of low interest rates and political and economic uncertainty, gold typically performs well.
Gold, as a safe-haven asset, has already risen by 59% year-to-date, driven by factors such as geopolitical and economic uncertainties, expectations of U.S. interest rate cuts, strong buying from central banks worldwide, de-dollarization trends, and significant inflows of Exchange-Traded Fund (ETF) funds.
Simpson noted, “This rally has also turned into a momentum trade, with traders flocking in just to chase the price increase.”
Trump mentioned that Washington is considering cutting some trade relationships with China, including in edible oils. Both countries have started to impose port charges on each other this week.
The International Monetary Fund (IMF) has raised its global growth forecast for 2025, citing better-than-expected tariffs and financial conditions, but also warning that renewed tensions in U.S.-China trade could dampen growth.
In addition to gold, silver also rose by 2.38% to $52.70 on Wednesday, having touched a historic high of $53.60 during trading on Tuesday, influenced by the rising gold trend and tightening supply in the spot market.
In other precious metals, platinum rose by 1.3% to $1,658.65 and palladium increased by 0.9% to $1,538.75.
(Adapted from relevant reports by Reuters)