Gold has reached new highs in global markets. On Friday it crossed the mark of $ 4300 an ounce. This week could be the best week for sleep in 5 years. The main reasons behind this rise are the increasing tension over trade between the US and China and the possibility of the Federal Reserve cutting interest rates twice this year. Apart from this, geopolitical tensions, good purchases by central banks, US government shutdown, increasing investment in exchange traded funds (ETFs) are also boosting the prices.
Also, increasing debt concerns of US regional banks have given traders another reason to buy gold. The price of gold has increased by more than 65% so far this year. According to Reuters, the spot price of gold in global markets reached a new high of $ 4,378.69 an ounce. However, later it slipped slightly to $ 4,336.18 an ounce.
US gold futures for delivery in December rose 1% to $4,348.70. Gold has increased by about 8% this week. This will be its best week since March 2020. Every day gold is creating new peaks.
$4500 mark may be touched earlier than expected
According to Reuters, Tim Waterer, Chief Market Analyst at KCM Trade, says that the target of $ 4,500 an ounce for gold may come earlier than expected. But a lot will depend on how long concerns about US-China trade and the US government shutdown continue to dominate the market.”
US President Donald Trump has announced to stop edible oil trade with China. This announcement also affected the markets, due to which the demand for gold increased. New tensions have arisen regarding trade between America and China. China has announced export restrictions on rare earth elements from November 1. After this, America announced 100% additional tariff on China from November 1. China has also warned of retaliatory action on America’s action. Tensions between the world’s two largest economies have raised fears of long-term damage to the global economy. This may increase the demand for gold.
Fed may reduce benchmark rates by 0.25 percent in October
As far as reduction in interest rates is concerned, US Central Bank Federal Reserve Chairman Jerome Powell has indicated to cut the benchmark rates by another 0.25 percent at the end of October. As key interest rates fall, bonds become less attractive, causing investors to turn to precious metals like gold and silver. At the same time, due to the delay in the release of key economic data in America due to the shutdown, there is uncertainty in the market and investors are increasing investment in safe asset gold.
Condition of silver in global market
The spot price of silver reached a record high of $54.35 an ounce. But then it fell to $53.86 an ounce. However, it continues to rise on weekly basis. There is a shortage of silver in the London market. Due to this, there is a decrease in the supply of silver all over the world.