Safe-haven surge, Fed rate-cut bets drive gold to new record highs

FE Team | Published: October 16, 2025 22:26:38

Gold hit a record high for the fourth straight session on Thursday, as investors flocked to the safe-haven metal on brewing US-China trade tensions and the US government shutdown, with bets on interest rate cuts fueling the momentum, reports Reuters.
Spot gold was up 0.8 per cent at $4,242.65 per ounce, as of 09:10 a.m. ET (1310 GMT) after bullion touched a record high of $4,254.61 earlier.
US gold futures for December delivery were up 1.3 per cent at $4,256.70.
The yellow metal has gained over 60 per cent year-to-date, driven by geopolitical tensions, aggressive rate-cut bets, central bank buying, de-dollarisation and robust ETF inflows.
"Gold's trajectory will hinge on the rate-cut picture heading into 2026 as well as the developments around US-China. If no deal is reached between the US-China and the relationship continues to deteriorate, that could be the spark gold needs to cross the $5000/oz barrier," said Zain Vawda, analyst at MarketPulse by OANDA.
Investors this week have stayed focused on the simmering US-China trade spat, with Washington on Wednesday criticizing China's expanded rare earth export controls as a threat to global supply chains.
Traders are pricing in a 25 basis-point US Federal Reserve rate cut in October, and another in December, with probabilities of 98 per cent and 95 per cent, respectively.
Non-yielding gold typically performs well in a low-interest-rate environment.
Short-term pullbacks in gold are likely to be temporary, as bullish investors tend to use dips to re-enter positions, Vawda said.
HSBC raised its 2025 average gold price forecast to $3,355 an ounce on Wednesday, citing safe-haven demand from geopolitical tensions, economic uncertainty and a weaker US dollar. Meanwhile, the ongoing US government shutdown has halted scheduled economic data, with a Treasury official warning it could cost the economy up to $15 billion a week in lost output.
Spot silver fell 0.2 per cent to $52.96 per ounce, after hitting a record high of $53.60 on Tuesday, tracking gold's rally and supported by tightness in the spot market.
Platinum rose 0.7 per cent to $1,665.24 and palladium climbed 1.8 per cent to $1,564.00.