Background on Key Figures and Institutions
The recent rise in gold prices can be attributed to two primary factors: the weakening US dollar and renewed demand for safe-haven assets due to concerns over the prolonged US government shutdown and uncertainty surrounding the legality of tariffs imposed by President Donald Trump.
Peter Grant, Senior Strategist and Vice President at Zaner Metals, highlighted the surge in demand for safe-haven assets: “We’re seeing a resurgence of demand for safe-harbor assets as the government shutdown persists and there’s skepticism from Supreme Court judges regarding the legality of Trump’s tariffs.”
The Federal Reserve (Fed) has already cut interest rates twice this year, and markets predict a 72% chance of another reduction in December. Beth Hammack, President of the Cleveland Fed, stated that persistently high inflation levels discourage further interest rate cuts by the US central bank.
Gold Price Movement and Market Impact
On Thursday, spot gold increased by 0.2% to $1,389.91 per ounce, while US gold futures for December delivery closed unchanged at $1,391.
The US dollar fell by 0.5% after reaching its highest level in four months the previous session, making gold cheaper for foreign buyers.
Amidst the government shutdown and judicial skepticism towards Trump’s tariffs, gold is seen as a safe-haven asset. This non-interest-bearing commodity thrives in low-interest-rate environments.
Other metals also experienced price changes: silver increased by 0.3% to $18.22 per ounce, platinum dropped by 1.8% to $1,533.93, and palladium fell by 2.7% to $1,381.18.
However, equity market declines have dampened confidence in base metals. This development countered the positive impact of improved demand outlooks in China, the world’s largest metal producer.
The benchmark aluminum price on the London Metal Exchange (LME) decreased by 0.2% to $2,843 per tonne, reaching its lowest level since October 23.
Key Questions and Answers
- Q: What factors contributed to the rise in gold prices? A: The primary factors were the weakening US dollar and increased demand for safe-haven assets due to concerns over the government shutdown and uncertainty surrounding Trump’s tariffs.
- Q: Who are the key figures mentioned in this article? A: Peter Grant, Senior Strategist and Vice President at Zaner Metals, and Beth Hammack, President of the Cleveland Fed.
- Q: How have recent Federal Reserve actions affected gold prices? A: The Fed’s two interest rate cuts this year and market expectations of another reduction in December have supported gold prices as a safe-haven asset.
- Q: What is the current outlook for base metal prices, particularly aluminum? A: The benchmark aluminum price on the LME has decreased to its lowest level since October 23 due to equity market declines and dampened confidence in base metals.
