Spot Gold extended rally to a new all-time high of $4,241.77/oz. on Thursday, supported by expectations of more Federal Reserve interest rate cuts, the US government shutdown and reignited US-China trade tensions.
Yesterday US officials criticized China’s expanded rare-earths export controls, considering them a threat to global supply chains. Earlier this week, the two nations imposed reciprocal port fees on each other’s ships.
US Treasury Secretary Bessent said that Washington could deploy further measures, including export controls, in case Chinese authorities proceeded.
Meanwhile, Federal Reserve Chair Jerome Powell said on Tuesday the US labor market was still subdued, but the economy “may be on a somewhat firmer trajectory than expected.”
The Fed chief also noted rate decisions would be made on a “meeting-by-meeting” basis, balancing labor market weakness with elevated inflation.
Markets are now pricing in about a 96% chance of a 25 basis point Fed rate cut in October and a 93% chance of another 25 bps cut in December.
At the same time, the federal government shutdown, already lasting for two weeks, could cost the US economy $15 billion per week in lost production, according to a Treasury official.
US President Donald Trump announced this week his administration would produce a list of “Democrat programmes”, which will be closed due to the government shutdown.
Spot Gold was up 0.30% on the day to trade at $4,220.22 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve, robust ETF inflows and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Year-to-date, the yellow metal has surged 60.81%.
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