Gold hits record high on US rate cut bets; silver joins rally to hit all-time peak

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A worker polishes gold bullion bars at the ABC Refinery in Sydney on August 5, 2020. — AFP
A worker polishes gold bullion bars at the ABC Refinery in Sydney on August 5, 2020. — AFP

Gold prices surged to a record high on Monday, riding on growing expectations of further US interest rate cuts and strong safe-haven demand, with silver also joining the rally to hit an all-time peak.

Spot gold rose 1.2 per cent to a record $4,391.92 an ounce, while spot silver climbed 2.7opc by 0344GMT to hit a historic high of $69.23.

Bullion has gained 67pc so far this year, shattering multiple records and breaching the $3,000 and $4,000 per ounce milestones for the first time. It is poised for its biggest annual gain since 1979.

Silver has surged 138pc year-to-date, vastly outperforming gold, underpinned by robust investment inflows and persistent supply constraints.

“With December usually producing positive returns for gold and silver, seasonality is on their side,” said StoneX senior analyst Matt Simpson.

“Given that gold has already risen 4pc this month and we’re nearing the end of the year, bulls may want to tread with caution as volumes are to deplete and odds of profit-taking are also likely on the rise.”

Traditionally viewed as a safe-haven asset, gold has been supported by heightened geopolitical and trade tensions, steady central bank buying and expectations of lower interest rates next year.

A softer dollar has provided an additional tailwind by making the metal cheaper for overseas buyers.

Markets are currently pricing in two US rate cuts for next year despite the Federal Reserve signalling caution. Non-yielding assets such as gold tend to benefit in lower interest rate environments.

Simpson said two Fed rate cuts were pencilled in for 2026, with a faster US jobs slowdown and a shift to a more dovish Fed likely to add further upside to gold.

Elsewhere, platinum jumped 4.1pc to $2,054.25, hitting its highest in more than 17 years, while palladium climbed 4pc to $1,781.32, hitting a near three-year high.

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