Gold has achieved a record high, reflecting strong demand for safe-haven assets. This surge is primarily driven by an ongoing government shutdown in the U.S. and expectations for potential interest rate cuts by the Federal Reserve.
Gold Prices Reach New Heights
On October 7, 2023, spot gold prices rose by 0.1%, reaching $3,962.63 per ounce. Earlier in the session, gold peaked at an unprecedented $3,977.19 per ounce. U.S. gold futures for December delivery also increased, gaining 0.2% to $3,985.30 per ounce.
Market Factors Influencing Gold Prices
- Government shutdown contributes to economic uncertainty.
- High likelihood of interest rate cuts in both October and December.
- OANDA’s senior market analyst, Kelvin Wong, highlighted the impact of these factors on gold prices.
While the Kansas City Federal Reserve Bank’s President, Jeff Schmid, expressed caution about cutting rates further due to inflation concerns, markets remain optimistic. The CME FedWatch tool indicates strong pricing for a 25 basis-point cut, with probabilities of 93% for October and 82% for December.
Demand Drivers
This year, gold prices have climbed by 51%, supported by:
- Robust central bank purchases.
- Increased interest in gold-backed exchange-traded funds (ETFs).
- A weaker U.S. dollar.
- Growing retail investor interest, reflecting fears over trade and geopolitical tensions.
Goldman Sachs recently revised its projection for gold prices. It raised the December 2026 forecast to $4,900 per ounce, up from $4,300, citing increased demand from Western ETFs and central banks.
Additional Insights
In related commodities, as of October 7:
- Spot silver was steady at $48.49 per ounce.
- Platinum decreased by 0.1% to $1,624.11 per ounce.
- Palladium increased by 0.8% to $1,329.63 per ounce.
Moreover, China’s central bank has consistently added gold to its reserves for eleven consecutive months, showcasing a significant shift in investment strategies.
