Gold prices climbed to a three-week high Thursday, topping $4,200 an ounce as investors hoped the Fed would cut interest rates in December after the government releases delayed economic data.
Spot gold hit $4,215.49 per ounce, its highest level since Oct. 21, before settling at $4,187.49. The precious metal has surged 60% this year, reaching a record $4,381.21 on Oct. 20.
The rally came after the US government began to reopen following a record 43-day shutdown — meaning that delayed economic data will be coming out soon.
“Markets bet that once data flows restart, a softer U.S. economic picture could justify additional rate cuts, which support the non-yielding metal,” Soojin Kim from MUFG told The Wall Street Journal.
A Reuters poll showed 80% of economists expect a 25 basis-point cut at the next meeting.
Private surveys had already indicated job market weakness during the shutdown.
Lower interest rates typically boost gold, which offers no yield but is prized as a safe-haven asset during economic uncertainty.
The Fed cut rates last month, though Chair Jerome Powell cautioned against expecting further easing this year due to a lack of data.
But investors are increasingly turning to gold for reasons beyond rate cuts.
Standard Chartered said in a note that gold’s correlation with traditional drivers like the dollar and real yields has weakened over the past two weeks, reflecting a shift toward structural concerns like currency debasement and US debt.
The metal’s surge has been fueled by rising ETF inflows and geopolitical concerns, according to analysts. Central banks have also been buying gold at record levels, part of a broader de-dollarization trend.
Gold has historically served as a hedge against inflation and economic turmoil. The current rally suggests investors are growing more anxious about the US fiscal outlook and the potential for currency devaluation.
The precious metal has outpaced equities this year, prompting some analysts to warn of bubble concerns.
Morgan Stanley noted in October that investors may be buying gold as a hedge against the risk of a speculative AI bubble in stocks.
Silver briefly rallied Thursday, hitting its highest level since Oct. 17 before edging down 0.1% to $53.06 per ounce.
Tai Wong, an independent metals trader, warned that if silver doesn’t break higher decisively, another round of profit-taking could follow.
Platinum fell 0.8% to $1,617.90 and palladium dropped 1% to $1,492.00.
Gold’s 60% gain this year far exceeds typical annual returns for the metal, which has averaged around 10% over the past decade.
The surge has raised questions about whether prices can sustain these levels or if a correction is looming.
For now, investors show no signs of backing away.
The combination of Fed rate-cut predictions, debt concerns and geopolitical uncertainty continues to drive demand for the safe-haven asset.
US gold futures for December delivery settled at $4,206.20 per ounce Thursday.
