Gold hit a record high for the fourth straight session on Thursday, surging above $4,300 per oz as investors flocked to the safe-haven metal amid escalating U.S.-China trade tensions and the U.S. government shutdown, with speculation of an interest rate cut fueling the momentum.

Spot gold rose 2.6% to $4,316.99 per oz at 4:07 p.m. ET (2007 GMT), after bullion hit a record high of $4,318.75 earlier. U.S. gold futures for December delivery closed 2.5% higher at $4,304.60, after hitting a record high of $4,335/oz.

The yellow metal has gained more than 60% so far this year, driven by geopolitical tensions, speculation of aggressive interest rate cuts, central bank buying, dedollarization, and strong ETF inflows.

"Gold's movement will depend on the outlook for interest rate cuts heading into 2026 as well as developments surrounding the US-China relationship. If a US-China deal is not reached and relations continue to deteriorate, that could be the trigger gold needs to break through the $5,000/oz barrier," said Zain Vawda, analyst at MarketPulse by OANDA.

Investors this week remained focused on the escalating US-China trade dispute, with Washington on Wednesday criticizing China's expansion of rare earth metals export controls as a threat to global supply chains.

Meanwhile, Donald Trump said on Thursday that he and Russian President Vladimir Putin agreed to hold another summit to discuss ending the war in Ukraine, one day before the US president is scheduled to speak with Ukrainian leader Volodymyr Zelenskiy.

Traders are pricing in a 25 basis point US Federal Reserve rate cut in October, and another cut in December, with a 98% and 95% probability, respectively. Non-yielding gold typically performs well in a low-interest rate environment.

The short-term decline in gold prices is likely temporary, as bullish investors tend to capitalize on the dip to re-enter positions, Vawda said.

HSBC raised its 2025 average gold price forecast to $3,355 per ounce on Wednesday, citing demand for safe-haven assets due to geopolitical tensions, economic uncertainty, and a weakening US dollar.

Meanwhile, the ongoing US government shutdown has halted scheduled economic data, with a Treasury official warning that it could cost the economy up to $15 billion per week in lost output.

Spot silver rose 1.8% to $54.04 per ounce, after hitting a record high of $54.15 earlier in the session, tracking gold's rally and supported by tight spot markets. Platinum rose 3.2% to $1,706.65, and palladium gained 4.6% to $1,606.00. (alg)

Source: Reuters