Gold hit a new record high above $4,100 on Tuesday (October 14), boosted by expectations of an interest rate cut this month by the US Federal Reserve and investors fleeing for safety amid escalating trade tensions between Washington and Beijing.

Spot gold rose 0.9% to $4,145.85 per oz at 1:50 PM ET (17:50 GMT), after hitting a record high of $4,179.48 earlier in the session. US gold futures for December delivery rose 0.7% to close at $4,163.40.

The precious metal has surged about 57% this year, breaking through $4,100 for the first time on Monday. The rally has been driven by a combination of factors, including geopolitical uncertainty, expectations of a US interest rate cut, robust central bank buying, and strong ETF inflows.

Analysts at Bank of America and Societe Generale now expect gold to reach $5,000/oz by 2026.

"Elevated US-China trade tensions, the ongoing government shutdown, and expectations of further Fed policy easing are all supporting gold," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

US President Donald Trump's threat to impose 100% tariffs on Chinese goods, tit-for-tat port tariffs by the world's two largest economies, and the broader macro trend of dedollarization could push gold to $5,000/oz by the middle of next year, Grant added.

Trump is scheduled to meet with Chinese leader Xi Jinping in South Korea later this month, Treasury Secretary Scott Bessent said on Monday. Non-yielding gold tends to perform well in a low-interest-rate environment, and the market is expecting a 25 basis point rate cut at this month's Fed meeting, followed by a similar cut in December.

"Based on the data we have, it's safe to say that the employment and inflation outlook appears to have changed little since our September meeting four weeks ago," Fed Chairman Jerome Powell said in a speech at the National Association for Business Economics' annual meeting.

Spot silver, driven by the same factors that boosted gold and tight spot markets, reached a record high of $53.60/oz before weakening 0.9% to $51.86. Platinum weakened 0.3% to $1,640.76, and palladium rose 3.2% to $1,521.50. (alg)

Source: Reuters