Gold price resumes upward march after one-day reprieve as trading volume tops record

[stack of shiny gold bars 3d illustration]
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Gold and silver rebounded with strong rallies Monday following Friday's sharp pullback, as investors resumed their search for refuge in precious metals with trade tensions mounting and economic clouds forming.

Broader trader and investor sentiment had improved after President Trump sought to ease trade tensions with China after markets were rattled early Friday by U.S. bank credit woes, but the safe-haven gold and silver bulls appeared undeterred by Monday's improved risk appetite in the market.

Day 20 of the U.S. government shutdown and the resulting lack of U.S. economic data have added to overall uncertainty, which is bullish for the precious metals markets.

Meanwhile, traders are pricing in a 99% chance that the Federal Reserve will cut interest rates next week, with another cut expected in December.

CME Group (CME [https://seekingalpha.com/symbol/CME]) said Monday that total volume across its metals complex reached a record [https://seekingalpha.com/pr/20271184-cme-group-metals-complex-reaches-all-time-daily-volume-record] 2,829,666 contracts on Friday, shattering the previous record of 2,148,990 contracts set less than two weeks earlier.

Investors appear to be increasingly willing to allocate more of their funds to gold, RBC Capital analysts said in a note, noting a "general comfort in letting gold exposures run as a share of the average investor portfoli" because of broad uncertainty caused by the U.S. government shutdown, tariffs and U.S.-China tensions as well as general concerns about economic growth, inflation and the Fed's independence.

RBC revised its gold price forecasts higher, "with $4,500 and $5,000/oz now accounted for in our middle and high scenarios, respectively," the analysts wrote, highlighting that while investors are not leeing other markets, "even a small rotation" out of other assets can have a sizeable impact on the global gold market.

Front-month Comex gold (XAUUSD:CUR [https://seekingalpha.com/symbol/XAUUSD:CUR]) for October delivery finished +3.5% to $4,336.40/oz, a new all-time record and its largest one-day percentage gain since April 9, 2020, and front-month Comex October silver (XAGUSD:CUR [https://seekingalpha.com/symbol/XAGUSD:CUR]) ended +2.5% to $51.119/oz, its second-highest close.

Gold and silver are up 12.9% and 10.5%, respectively, so far this month, and the metals have surged 64.9% and 76.6% YTD, respectively.

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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