Spot Gold extended rally to a fresh all-time high of $4,378.69/oz. on Friday and was on course for its largest weekly gain since March 2020, supported by expectations of more Federal Reserve interest rate cuts, the US government shutdown and reignited US-China trade tensions.
This week, US officials criticized China’s expanded rare-earths export controls, considering them a threat to global supply chains. In turn, China accused the US of causing panic over its rare earth controls and rejected calls to reverse export curbs.
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.”
And, Federal Reserve Governor Christopher Waller said he supported another rate cut because of labor market concerns.
Markets are now pricing in about a 97% chance of a 25 basis point Fed rate cut in October and an 81% 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.
“(For gold) $4,500 could arrive as a target perhaps sooner than expected, but much may depend upon how long concerns about U.S.-China trade and the government shutdown linger over the market for,” KCM Trade Chief Market Analyst Tim Waterer was quoted as saying by Reuters.
Spot Gold was up 0.70% on the day to trade at $4,356.54 per troy ounce.
The precious metal has risen 8.48% so far this week.
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 66.01%.
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