Gold broke through $4,100 an ounce for the first time on Monday (October 13), hitting a new record high amid re-escalating U.S.-China trade tensions and expectations of a U.S. interest rate cut, while silver also rose to an all-time high.

Spot gold rose 2.1% to $4,099.55 an ounce, as of 10:50 a.m. ET (1450 GMT), after hitting a record $4,103.58. U.S. gold futures for December delivery rose 3% to $4,120.10.

Gold has surged 56% this year and topped $4,000 for the first time last week, driven by factors including geopolitical and economic uncertainty, expectations of a U.S. interest rate cut, and robust central bank buying.

"Gold and silver prices are rising as investors worry about global conditions, both economically and politically," said Jeffrey Christian, Managing Partner of CPM Group. On the geopolitical front, US President Donald Trump re-ignited trade tensions with China on Friday, ending an uneasy truce between the world's two largest economies.

Meanwhile, traders are pricing in a 97% probability of a 25 basis point Federal Reserve rate cut in October and a 100% chance for December. Gold, a non-yielding asset, tends to perform well in a low-interest rate environment.

Analysts at Bank of America and Societe Generale now expect gold to reach $5,000 by 2026, while Standard Chartered has raised its forecast to an average of $4,488 next year.

"We think this rally still has potential, but a short-term correction would be healthier for the longer-term uptrend," said Suki Cooper, global head of commodity research at Standard Chartered Bank. Spot silver rose 3.3% to $51.95, hitting a record high of $52.07 earlier in the session, driven by the same factors that supported tight gold and spot markets.

Technical indicators show both are in overbought conditions, with the Relative Strength Index (RSI) at 80 for gold and 83 for silver. Platinum rose 4.6% to $1,660.57, and palladium rose 5.4% to $1,482.00. (alg)

Source: Reuters