Gold Soars Above $4200 Driven by Trade Tensions and Interest Rate Expectations
Gold has once again broken records today, Wednesday, as indicators rise to unprecedented levels exceeding $4200 per ounce, reflecting a strong trend among investors towards safe havens. This exceptional performance comes amid a wave of renewed trade tensions between the United States and China, and bolstered expectations for monetary easing from the Federal Reserve.
In trading details, gold jumped in spot transactions to $4200.05 per ounce, achieving gains of 1.4%. Futures contracts for gold for December delivery rose to $4217.50 with an increase of 1.3%. With this new jump, the precious metal strengthens its upward trajectory, having risen about 55% since the beginning of the year, after recording a near-record level of this amount yesterday, Tuesday, at $4179.48.
This record rise is driven by a combination of favorable factors, with renewed trade tensions between the economic powers of the United States and China topping the list of catalysts. The intensity of these tensions has increased following U.S. President Donald Trump's statements that Washington is considering reducing some trade relations with Beijing, including imports of cooking oil, following both sides imposing reciprocal port tariffs.
In a parallel context, expectations of a new rate cut by the Federal Reserve support the strong demand for gold. Jerome Powell, the Federal Reserve Chairman, confirmed in statements yesterday that interest rate decisions will be made on a "meeting-by-meeting" basis, expressing that the U.S. economy "may be on a more stable path than previously expected" despite a weak labor market.
Investors are now awaiting the upcoming Federal Reserve meeting this month, where they expect a 25 basis point cut, with a similar cut likely in December. This flexible monetary scene, along with central bank purchases of gold and strong inflows from exchange-traded funds, creates an ideal environment for the continued brilliance of the yellow metal as a safe investment option amid prevailing uncertainty.
