Gold prices surged to a fresh record high, breaking the $4,100 mark, as renewed US-China trade tensions and expectations of a US Federal Reserve rate cut fueled safe-haven demand. Spot gold rose 2.2% to $4,100.24 per ounce, buoyed by a dovish Fed outlook and escalating trade frictions.
The US-China trade landscape worsened over the weekend, with President Donald Trump threatening tariffs of up to 100% on Chinese imports and tightening export controls on key technology. In response, China accused the US of double standards and warned of potential countermeasures, further fueling market uncertainty.
Meanwhile, the US dollar index dipped, with traders pricing in a 97% probability of a 25-basis-point Federal Reserve rate cut in October and a 100% chance for December. Lower interest rates tend to benefit gold, a non-yielding asset, by reducing the opportunity cost of holding it.
Bank of America analysts expect gold to reach $5,000 per ounce in 2026, citing continued safe-haven demand and central bank buying. With trade tensions and rate-cut expectations driving gold prices, investors are closely watching the next move from the Federal Reserve.
Gold's rally shows no signs of slowing, with the metal extending its gains for the ninth consecutive week. UBS Chief Investment Officer Mark Haefele recommends allocating a mid-single-digit percentage of portfolios to gold, emphasizing its role as a reliable hedge against inflation and market uncertainty.
Credit - Reuters
