Gold and silver climbed to new record highs early Friday on fears about a credit crisis and ongoing trade tensions between the U.S. and China as speculation mounted over a monetary policy. The yellow metal soared past the $4300 an ounce mark, before retreating after President Trump said his proposed 100% tariff on goods from China would be unsustainable.
The yellow metal was headed for its best weekly gain since 2008 after two regional U.S. banks disclosed bad loans Thursday because of fraud, adding to some concern about a burgeoning credit crisis in the U.S. Separately, the U.S. and China continued to trade shots about access to “rare earth” minerals crucial to production of electronics and other key products.
Meanwhile, the Fed’s Beige Book, the economic reports from the 12 regional banks, indicated that U.S. consumers are starting to feel the pinch from tariffs, which are pushing up inflation amid a stalled labor market. And the central bank is increasingly expected to cut interest rates again at policymakers’ next meeting later this month. The U.S. government shutdown – which is in its 17th day – also added to uncertainty driving investors to precious metals.
December gold futures rose 2.5% Thursday to settle at $4,304.60 an ounce on Comex, and the front-month contract gained 7.6% in the first four days of the week. Bullion surged 10% in September, the most in six months, after adding 5% in August and gaining 1.2% in July. It’s up 63% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The December contract is currently down $1.00 (-0.02%) an ounce to $4303.60 and the DG spot price is $4293.50.
Front-month silver futures gained 3.7% Thursday to settle at $53.30 an ounce on Comex. The December contract rallied 13% in the first four days of the week. 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 down $2.011 (-3.77%) an ounce to $51.285 and the DG spot price is $52.94.
Almost 100% of the investors tracked by the CME FedWatch Tool are betting that the Fed will reduce rates by 25 basis points in October, with 1% expecting the central bank to reduce by 50 basis points. 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.
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.
Spot palladium gained 4.5% Thursday to $1,602.50 an ounce and is up 12% this week. 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 down $114.30 an ounce to $1540.00.
Spot platinum rallied 3.8% Thursday to $1,716.20 an ounce. It rose 6.8% in the first four days of the week. 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 down $109.80 an ounce to $1636.30.
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