Gold has hit a fresh all-time high, with silver also surging to a nine-year peak, driven by growing investor optimism about potential US interest rate cuts. This rally in precious metals comes as markets anticipate key economic data that could give the US Federal Reserve more reason to lower borrowing costs.
Spot gold rose by as much as 0.9% to reach $3,719.95 an ounce yesterday, surpassing its previous record set last week. This increase was fueled by the Fed’s first rate cut since December, as lower rates make non-interest-bearing assets like gold more attractive to investors.
Silver’s performance has been even more dramatic, with the metal reaching $43.7727 an ounce. The surge is being supported by a rush from bullish options traders. On Friday, the trading volume of the iShares Silver Trust options hit a staggering 1.2 million, marking the highest daily turnover since April 2024. This spike in activity highlights the strong market confidence in silver’s upward trajectory.
The excitement isn’t limited to just gold and silver. The rally has also spilled over into other key industrial metals like platinum and palladium, signaling a broader investor appetite for precious metals.
According to Soni Kumari, a commodity strategist at ANZ Group Holdings, the technical indicators for these metals are looking very strong, and there’s a growing expectation for more rate cuts. The fact that silver has broken through its recent resistance at $43 an ounce and gold has powered past the $3,708 mark suggests that prices are likely to continue their upward trend.
Investors are now keenly awaiting new data, including Friday’s personal consumption expenditures (PCE) price index in the US, which is the Fed’s preferred measure of inflation. A slower growth rate in inflation would strengthen the case for further rate cuts. Federal Reserve Chair Jerome Powell is also scheduled to speak on the economic outlook, and his comments will be closely watched by traders.
Beyond the prospect of rate cuts, the demand for gold has also been boosted by its role as a safe haven asset. Concerns over geopolitical conflicts and the potential impact of US President Donald Trump’s tariffs on the global economy have encouraged investors to seek security in precious metals. Additionally, continuous purchases by central banks and increased holdings in exchange-traded funds are providing further support to the market.
Markets are currently pricing in at least two more rate cuts this year. This outlook for monetary easing is a major factor behind gold’s impressive surge of more than 40% so far this year.
As of 2:56 p.m. in Singapore, spot gold was up 0.8% at $3,715.75 an ounce. Silver saw a 1.6% rise, platinum gained 1%, and palladium was up 0.9%. The Bloomberg Dollar Spot Index remained flat. The future of these metals appears bright as long as the conditions favouring lower interest rates and safe-haven demand persist.
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