Due to bumper demand, gold is touching new peaks every day, not only in the domestic market but also in the global markets. The spot price of gold in the global market reached an all-time high of $ 4,234 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. Gold prices have increased by about 5% so far this week.
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. As key interest rates fall, bonds become less attractive, causing investors to turn to precious metals like gold and silver.
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. 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.
Fear of damage to global economy due to US-China tension
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. However, Finance Minister Scott Besant has proposed to wait for some time before increasing the tariffs. Apart from this, good purchases by central banks, US government shutdown, increasing investment in Exchange Traded Funds (ETF) have also increased gold buying.
Silver shortage increasing prices
The spot price of another precious metal, silver, has also seen a tremendous rise in the last few days. 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. Benchmark silver prices have surpassed futures prices in New York. Silver has crossed the record level of $ 53 an ounce.