Gold has made a new record high in global markets. The spot price has reached $ 4185 per ounce. The main reasons behind this are the increasing tension between America and China and the possibility of the Federal Reserve cutting interest rates twice this year. The spot price of other precious metal, silver, has also seen a tremendous rise in the last few days. On Tuesday, the price touched a new all-time high above $53.54 an ounce. However later it declined.
According to Bloomberg, US Central Bank Federal Reserve Chairman Jerome Powell has indicated to cut benchmark rates by another 0.25 percent at the end of October. Due to this, the yield on US Treasury bonds fell to the lowest level in several weeks on Tuesday. As key interest rates fall, bonds become less attractive, causing investors to turn to precious metals like gold and silver.
Apart from this, good purchases by central banks, US government shutdown, increasing investment in Exchange Traded Funds (ETF) have also increased gold buying.
Trump has made a new announcement
Meanwhile, 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. Earlier, China 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.
What is the reason for the rise in silver?
In the case of silver, the market has been affected by lack of liquidity in London. Due to this, there is a decrease in the supply of silver all over the world. Benchmark silver prices rose above futures prices in New York. Apart from this, traders are worried before the end of the so-called Section 232 investigation by the US administration regarding important minerals including silver, platinum and palladium. The investigation has rekindled fears that new tariffs could be imposed on these metals, even after they were officially exempted from tariffs in April.