Gold hits another record with bank worries in focus alongside trade, rate cuts

[stack of shiny gold bars 3d illustration]
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Gold and silver soared again to new all-time highs Thursday, sparked by concerns about credit quality in the economy, in addition to U.S.-China trade frictions and growing expectations for further interest rate cuts by the Federal Reserve.

Broader markets were hit as two major regional banks disclosed problems with loans involving allegations of fraud, adding to concerns about wider credit-related losses in the system, following the bankruptcies of two auto industry-related companies, which have helped boost demand for safe-havens such as gold and silver.

"When you see one cockroach, there are probably more," JPMorgan Chase CEO Jamie Dimon said on the bank’s earnings conference call earlier this week, referring to the collapse of First Brands and Tricolor Holdings.

Fed Chair Powell signaled this week that the Fed is on track to deliver another 25 basis point rate cut this month, and traders are betting on another reduction in December; non-yielding gold typically performs well in a low-rate environment.

Gold also has been supported by concerns over a resurgence in trade tensions, particularly between the U.S. and China.

The dollar continues to face headwinds of a stretched valuation and unsustainable U.S. fiscal policies, and investors seeking alternatives to the dollar are preferring gold over other developed market currencies, Insight Investment's Francesca Fornasari said in a note. which "likely reflects the challenging fiscal outlook for traditional safe-haven currencies like the Japanese yen and euro, as seen in France's budget issues" and concerns about the next leader of Japan's ruling Liberal Democratic Party.

"While comparisons are being made to the 1980s price peak, the current price rise is underpinned by structural drivers, indicating that elevated prices will likely sustain," according to analysts at Australian bank ANZ, which now forecast gold at $4,400/oz by year-end [https://seekingalpha.com/news/4504651-anz-sees-gold-hitting-4400-by-end-2025-on-global-uncertainty-and-fed-rate-cuts] with a peak expected near $4,600/oz by June 2026.

Front-month Comex gold (XAUUSD:CUR [https://seekingalpha.com/symbol/XAUUSD:CUR]) for October delivery closed +2.5% to $4,280.20/oz, and front-month Comex October silver (XAGUSD:CUR [https://seekingalpha.com/symbol/XAGUSD:CUR]) ended +3.8% to $53.023/oz, the fifth consecutive daily increases for both metals that have seen gold gain 8.4% and silver surge 13.2%.

ETFs: (NYSEARCA:GLD [https://seekingalpha.com/symbol/GLD]), (NYSEARCA:GDX [https://seekingalpha.com/symbol/GDX]), (GDXJ [https://seekingalpha.com/symbol/GDXJ]), (NYSEARCA:IAU [https://seekingalpha.com/symbol/IAU]), (NYSEARCA:NUGT [https://seekingalpha.com/symbol/NUGT]), (PHYS [https://seekingalpha.com/symbol/PHYS]), (GLDM [https://seekingalpha.com/symbol/GLDM]), (AAAU [https://seekingalpha.com/symbol/AAAU]), (SGOL [https://seekingalpha.com/symbol/SGOL]), (RING [https://seekingalpha.com/symbol/RING]), (BAR [https://seekingalpha.com/symbol/BAR]), (OUNZ [https://seekingalpha.com/symbol/OUNZ]), (SLV [https://seekingalpha.com/symbol/SLV]), (PSLV [https://seekingalpha.com/symbol/PSLV]), (SIVR [https://seekingalpha.com/symbol/SIVR]), (SIL [https://seekingalpha.com/symbol/SIL]), (SILJ [https://seekingalpha.com/symbol/SILJ])

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