Gold hits another record high early Wednesday, over $3300 an ounce, as the yellow metal remained a hedge against geopolitical and economic uncertainty amid strong central bank buying. Spot gold rose to a record high of $3,317.90 earlier in the session.
The World Gold Council reported Tuesday that the People’s Bank of China has been adding gold to its reserves for five consecutive months. China is the world’s largest gold consumer. Separately, Bloomberg reported this week that the Chinese central bank has allocated fresh gold import quotas for some commercial banks in response to haven demand. The report cited people familiar with the matter.
“Gold investment demand should stay strong in the short term, as the escalating U.S.-China trade war hurts growth and local assets,” the World Gold Council stated in its report. “The global gold price strength, boosted by a restructuring of the world trade order and world market volatility, will provide further support.”
June gold futures rose 0.4% Tuesday to settle at $3,240.40 an ounce on Comex, but the most-active contract decreased 0.1% in the first two days of the week. Bullion gained 11% in March after rising 0.5% in February and adding 7.3% in January. It rallied more than $500, or 19%, in in the three months ended in March, the best quarter since 1986. The metal rose 27% in 2024, its biggest annual gain since 2010. The June contract is currently up $74.00 (+2.28%) an ounce to $3314.40 and the DG spot price is $3310.00.
China’s economy grew at a faster-than-expected rate of 5.4% in the first quarter, according to data released Wednesday from the National Statistics Burau. It was expected to grow 5.1% year on year.
Observers of the U.S., Chinese and global economies have become jittery over a possible recession, triggered by U.S. trade policy, including President Donald Trump’s newly announced tariffs, which have weakened the U.S. dollar and roiled global markets. A weaker dollar is bullish for gold because it makes the dollar-denominated precious metal more attractive to holders of other currencies.
Investors are closely watching whether the Federal Reserve will alter monetary policy sooner than expected in response to the volatility. The central bank has been widely expected to begin lowering interest rates which it increased during the pandemic beginning this summer.
Most investors tracked by the CME FedWatch Tool expect the Fed to begin interest rate cuts in June but keep them unchanged at the central bank’s next meeting in May. Lower interest rates are typically bullish for gold.
The Fed left rates unchanged at 4.25% to 4.50% in March. It reduced rates three times in 2024. 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. Previously, the Fed had kept rates at 5.25% to 5.50% for a year.
July silver futures dropped 0.5% Tuesday to settle at $32.30 an ounce on Comex. The rolling front month gained 1.2% so far this week after the contract rolled to July from May. Silver advanced 9.9% in March after retreating 2.4% in February and adding 10% in January. It gained 21% in 2024. The July contract is currently up $0.394 (+1.21%) an ounce to $32.950 and the DG spot price is $21.81.
Spot palladium gained 1.8% Tuesday to $987.50 an ounce and is up 7% in the first two days of the week. Palladium rose 7.3% last month after retreating 10% in February and advancing 11% in January. Palladium dropped 17% last year. The current spot price is flat at $984.00.
Spot platinum rose 0.8% Tuesday to $968.10 an ounce and adding 2.2% in the first two days of the week. Platinum increased 6.7% in March after sliding 4.7% in February and gaining 8.4% in January. Platinum lost 8.4% in 2024. The DG spot price is currently up $11.90 an ounce to $975.80.
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