Gold’s record-breaking rally continued on Wednesday, with the precious metal holding near all-time highs as renewed United States-China trade tensions and expectations of additional Federal Reserve rate cuts fuelled safe-haven demand.
By 4:15 pm AEDT (5:15 am GMT), spot gold was up 1.1% at US$4,188.93 per ounce, just shy of its historic peak near US$4,200.
Although analysts warned the metal may soon face profit-taking pressure, buyers maintained firm control amid a broadly weaker U.S. dollar.
The latest surge came after U.S. President Donald Trump reignited trade hostilities with China, saying, “I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act.”
“We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution.”
Both nations also began levying new port fees on each other’s cargo shipments, heightening market uncertainty.
The fresh tensions follow Trump’s earlier threat to impose 100% tariffs on Chinese imports, escalating a trade dispute that flared after Beijing tightened export controls on rare earth minerals last week.
Meanwhile, growing expectations for two more Federal Reserve interest rate cuts have added to gold’s appeal. Despite Fed Chair Jerome Powell’s cautious tone during Tuesday’s remarks, futures markets continue to price in a 95.7% chance of a rate reduction at the October and a 94.7% chance in December, according to the CME Group FedWatch Tool.
Powell noted that the U.S. economy “may be on a somewhat firmer trajectory than expected”, but also cautioned that “there is no risk-free path for policy as we navigate the tension between our employment and inflation goals”.
Attention now turns to upcoming Fed speakers for additional policy cues, with no major U.S. economic releases on the calendar this week.
