On Tuesday, gold prices hit an unprecedented high, surpassing $4,100 per ounce, driven by anticipation of Federal Reserve interest rate cuts and renewed fears over US-China trade tensions. According to Reuters, spot gold increased by 0.9%, reaching $4,145.85 at 1:50 pm Eastern Time (5:50 pm GMT), after earlier touching a record peak of $4,179.48. US gold futures for December delivery also climbed 0.7%, settling at $4,163.40 per ounce.
This year, gold has gained approximately 57%, breaking the $4,100 barrier for the first time on Monday. The rally is attributed to various factors such as geopolitical uncertainties, expectations of lower US interest rates, active central bank purchases, and significant inflows into exchange-traded funds (ETFs).
Analysts from Bank of America and Societe Generale have projected that gold could reach $5,000 per ounce by 2026.
“Growing trade tensions between the US and China, ongoing government shutdowns, and expectations of further monetary easing by the Federal Reserve are supporting gold prices,” said Peter Grant, vice president and senior metals strategist at Zaner Metals. He also mentioned that potential actions like President Donald Trump imposing 100% tariffs on Chinese imports, tit-for-tat port fees, and efforts to reduce dependence on the US dollar could push gold toward the $5,000 mark by mid-2026.
A major upcoming event is the scheduled meeting between President Trump and Chinese President Xi Jinping in South Korea later this month, as noted by US Treasury Secretary Scott Bessent.
Since gold does not generate yield, its appeal typically rises in environments with low interest rates. Markets widely expect the Fed to cut interest rates by 0.25% later this month, with another similar cut anticipated in December.
Fed Chair Jerome Powell commented that current employment and inflation data have remained largely unchanged since their September meeting.
Silver, which benefits from similar factors influencing gold, surged to a record high of $53.60 before retreating 0.9% to $51.86. Platinum declined slightly by 0.3%, settling at $1,640.76, while palladium rose significantly by 3.2%, reaching $1,521.50.