Gold prices rose to a new record high in trading on Tuesday, marking the 50th day this year that records have been broken. This comes amid escalating geopolitical tensions and expectations of a new cut in US interest rates.
Spot gold prices jumped approximately 1.2%, touching $4,500 per ounce, extending gains after the largest single-day jump in over a month. This occurs as traders bet that the US Federal Reserve will move to cut lending costs next year, following three interest rate cuts this year.
The appeal of gold as a safe haven was further bolstered last week by escalating geopolitical tensions, particularly in Venezuela, where the United States imposed a blockade on oil tankers while increasing pressure on the government of President Nicolás Maduro.
Escalating Geopolitical Tensions
Commenting on the incident involving the detention of oil tankers, a strategic expert stated: “Geopolitical tensions have returned to the forefront once again. While these developments have not led to an outright aversion to risk, they undoubtedly contribute to increased demand for gold as a primary hedging tool.”
Gold has jumped more than 70% this year and is on track for its best performance since 1979, supported by central bank purchases and inflows into physically-backed exchange-traded funds (ETFs), which have recorded steady increases every month except May.
Protectionist moves by US President Donald Trump to reshape global trade this year, as well as his threats to the Federal Reserve’s independence, have also fueled appetite for the yellow metal. Investors have been partly driven by so-called ‘debasement trades’—moving away from sovereign bonds and the currencies they are valued in due to fears their value will erode over time from rising debt levels.
In turn, a chief economist noted: “Gold ETF flows over the past few months have been largely driven by retail investors, not institutional investors. Price volatility will also remain high because retail flows are less stable.”
Record Levels for Silver
At the same time, silver prices hit record levels, surpassing $70 per ounce. They have achieved gains of over 140% since the start of the year, thanks to speculative inflows and ongoing supply disruptions across major trading hubs following historic pressure on short positions in October.
The gold Relative Strength Index (RSI) indicates the metal has entered overbought territory, reaching 80.3 on Tuesday. Silver, currently at 79.1, has remained at elevated levels for about two weeks. Readings above 70 typically indicate overbought conditions.
