Gold Hits Fresh Record on Fed Rate-Cut Hopes as Silver Surges

Core Insights - Gold reached a record high above $4,200 an ounce, driven by escalating US-China tensions and expectations of further interest rate cuts by the Federal Reserve [1][2] - Silver prices also surged, with significant volatility observed, particularly due to tight market conditions in London [1][4] Group 1: Market Dynamics - Gold climbed as much as 1.8% to a peak of $4,218.29, while spot silver advanced by 3.2% [1] - US Treasury yields fell to their lowest levels in months, following signals from Fed Chair Jerome Powell regarding a potential quarter-point rate cut [2] - Risk-off sentiment increased due to President Trump's trade threats against China, heightening tensions between the two economies [3] Group 2: Silver Market Conditions - The silver market is experiencing a lack of liquidity in London, leading to a global search for the metal and driving prices above futures in New York [4] - The gap between London and New York silver prices was approximately $1.09 an ounce, with the annualized one-month borrowing cost for silver reaching around 17% [4] Group 3: Precious Metals Performance - The four main precious metals have surged between 59% and 83% this year, with gold's rise supported by central bank purchases and ETF holdings [6] - Demand for precious metals has been bolstered by ongoing US-China trade tensions, threats to the Fed's independence, and concerns over budget deficits [7]