Gold prices hit a new high on Tuesday, driven by continuing geopolitical tension and economic uncertainty, plus speculation on further US rate cuts.
The price of spot gold hit an all-time high of $3,977.19 an ounce, before dropping slightly to $3,959.82 at 1111 GMT, while US gold futures for December delivery were up 0.2% at $3,983.10.
“Strong ETF demand remains key, driven by ‘FOMO’ and eroding trust in traditional safe havens,” Ole Hansen, head of commodity strategy at Saxo Bank, said. He noted that ongoing central bank demand and lower funding costs were also supporting bullion.
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The White House on Monday eased back on President Donald Trump’s claim that layoffs of government employees were underway due to the ongoing shutdown, but warned that job losses could occur as the impasse entered its seventh day.
The shutdown has postponed the release of key economic indicators, forcing investors to rely on secondary, non-government data to gauge the timing and extent of Fed rate cuts.
Markets continue to price in a 25 basis-point cut at this month’s meeting and a similar-sized reduction in the December meeting.
Gold seen going much higher
Non-yielding gold thrives in a low-interest-rate environment and during economic uncertainty.
Gold has climbed 51% so far this year on sizable central bank buying, increased demand for gold-backed exchange-traded funds, a weaker dollar and growing interest from retail investors seeking to hedge amid rising trade and geopolitical tensions.
“I see gold reaching $4,300/oz over the next 6 months. As the USD is expected to continue to depreciate,” with the overall macro and geopolitical scenario positive for gold price appreciation, Michael Langford, chief investment officer at Scorpion Minerals, said.
Goldman Sachs on Monday raised its December 2026 price forecast for gold to $4,900 per ounce from $4,300.
China’s central bank added gold to its reserves in September for the 11th straight month, data from the People’s Bank of China showed.
Meanwhile, political upheaval in Japan and France gripped currency and bond markets for a second day running on Tuesday.
Elsewhere, spot silver was down 0.2% at $48.43 per ounce, platinum fell 1% to $1,611.56 and palladium was steady at $1,320.06.
- Reuters with additional editing by Jim Pollard
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