Onome Amuge
Gold soared to a new record high on Wednesday, marking its fourth consecutive session of gains, as investors sought refuge from deepening U.S.-China trade tensions and growing concerns about global economic stability.
The precious metal rose 1.4 per cent to $4,218 a troy ounce, its highest price on record, extending a powerful rally that has seen bullion gain over 60 per cent year-to-date. The move was underpinned by a weaker dollar, expectations of further Federal Reserve rate cuts, and mounting anxiety over Washington’s latest escalation with Beijing.
The rally comes as the U.S. and China reignite their trade dispute, raising fears of a renewed slowdown in global trade. Earlier this week, both nations imposed new port fees on cargo ships, prompting U.S. President Donald Trump to warn that he was considering cutting trade ties with Beijing entirely.
“Uncertainty over the trade outlook has triggered a full-blown safe-haven rush. Gold is benefitting from an extraordinary convergence of macro risks — policy uncertainty, weak global growth, and the erosion of investor confidence in fiat currencies,” said Marcus Lee, commodities strategist at Orion Capital.
Despite an attempt at conciliation from U.S. Treasury Secretary Scott Bessent, who proposed a tariff truce focused on resolving disputes over China’s rare earth exports, gold traders brushed off the comments. “Markets are unconvinced any quick resolution is possible,” Lee added.
The Federal Reserve’s dovish tone has further supported the rally. On Tuesday, Fed Chair Jerome Powell acknowledged weakness in the labor market and suggested that the central bank may move toward a more neutral stance on interest rates, a shift widely interpreted as opening the door for rate cuts. Futures markets now price in a 98 per cent probability of a 25 basis-point cut at the Fed’s October meeting, followed by another in December.
At the same time, the Fed’s Beige Book pointed to stagnant economic activity and subdued hiring across districts, raising fears of a stagflationary environment, slow growth coupled with sticky inflation.
Adding to the unease, the U.S. government shutdown entered its fifteenth day, with no agreement in sight between the White House and Democrats. The prolonged deadlock has rattled financial markets, further boosting gold’s appeal.
The U.S. dollar index (DXY) slipped 0.28 per cent to 98.75, while the 10-year Treasury yield held steady at 4.04 per cent. Real yields, which move inversely to gold, remained near 1.74 per cent, providing a supportive backdrop for the metal.
Analysts say that while gold’s rally could face short-term consolidation, momentum indicators remain bullish. A sustained break above $4,218 could open the way to $4,250 and $4,300, while initial support lies around $4,150.
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