Gold and silver hit all time highs early Monday. Gold rose as investors revved up their safe-haven bets after U.S. President Donald Trump renewed tariff threats against China. Silver’s climb sparked amid a short squeeze in the London market.
Overall, enthusiasm for precious metals climbed amid haven demand triggered by geopolitical and economic uncertainty, threats to Federal Reserve independence and the U.S. government shutdown – which is in its 13th day. Rising fears of a trade war between the U.S. and China also buoyed precious metals prices but pressured Asian equities.
December gold futures rose 2.3% last week to settle at $4,000.40 an ounce on Comex, after the front-month contract gained 0.7% Friday. Bullion surged 10% in September, the most in six months, after adding 5% in August and gaining 1.2% in July. It’s up 51% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently up $114.10 (+2.85%) an ounce to $4114.50 and the DG spot price is $4100.70.
Front-month silver futures lost 1.5% last week to settle at $47.25 an ounce on Comex, though the December contract increased 0.2% Friday. Silver rose 15% last month, the biggest monthly rally in two and a half years, after climbing 11% in August and gaining 1.5% in July. It rose 21% in 2024. The December contract is currently up $3.043 (+6.44%) an ounce to $50.290 and the DG spot price is $52.17.
A short squeeze, such as the one in the silver market, occurs when many investors have sold the asset short – placed bets that the price will fall – and are forced to buy the commodity to cover their positions. That causes a sudden surge in prices.
Precious metals also rose after U.S. President Donald Trump threatened to impose new triple-digit tariffs on Chinese imports after Beijing tightened its control of rare earth minerals, essential to the production of electronics and other critical products. The tit-for-tat moves reignited fears of a trade war which had taken a backburner to other issues in recent months.
Expectations that the Fed will extend interest rate cuts at its meeting later this month further this month further supported prices. The Fed lowered interest rates by 25 basis points in September to 4.00% to 4.25% and is widely expected to cut rates again in October. Lower interest rates are typically bullish for gold.
Almost 98% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by 25 basis points in October, with the rest expecting the central bank to hold rates unchanged. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
This week’s scheduled consumer price index report has been delayed until Oct. 24 because of the U.S. government shutdown. The index wasn’t expected to come out at all while the government remained closed, but reports last week indicated that the federal government is calling employees at the Bureau of Labor Statistics back to work so they can publish a key inflation report for September. That’s because the government calculates Social Security payments using the index.
The CPI is also also widely followed by economists as a key signal of the economy. The Fed closely watches both inflation and jobs data when determining monetary policy.
Spot palladium rose 13% last week to $1,430.00 an ounce after rallying 0.5% Friday. Palladium rose 14% in September after declining 7.8% in August and climbing 8.8% in July. Palladium dropped 17% last year. Currently, the DG spot price is up $57.40 an ounce to $1497.00
Spot platinum slid 0.4% last week to $1,607.50 an ounce after losing 1.1% Friday. It increased 15% in September after rising 5.9% in August and dropping 3.9% in July. Platinum lost 8.4% in 2024. The DG spot price is currently up $74.40 an ounce to $1670.40.
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