Gold Hits New Record Amid US-China Tensions and Rate Cut Bets

Highlights:

• Gold soared to a record high of US $4,185 an ounce at the time of writing, driven by rising US-China tensions and expectations of further Federal Reserve rate cuts.
• Silver experienced extreme volatility, briefly hitting an all-time peak above US $53.54 an ounce before retreating as a historic squeeze began to ease.
• Risk-off sentiment intensified after U.S. President Donald Trump threatened to halt cooking oil trade with China, prompting retaliatory warnings from Beijing and boosting demand for safe-haven assets.

Gold prices surged to fresh all-time highs, propelled by escalating friction between the United States and China and growing market expectations that the Federal Reserve will lower interest rates twice more this year. At the time of writing, bullion peaked near US $4,185 an ounce, while spot silver also saw volatility—shooting past US $53.54 per ounce before retracting amid early signs of a squeeze reversal.

Yields Drop as Fed Signals Dovish Shift

Yields on U.S. Treasury securities tumbled to their lowest levels in weeks after Fed Chair Jerome Powell hinted that the central bank is geared toward a quarter-point rate cut later this month. Lower borrowing costs typically favor precious metals, which don’t yield interest, making gold and silver more attractive in that context.

Geopolitical Risk Fans Safe-Haven Demand

Heightened risk aversion across global markets added to the bullish tone. The rally gained further traction after U.S. President Donald Trump floated the idea of banning certain trade in cooking oil with China—a move that inflamed tensions between the world’s two largest economies. Beijing responded with threats of retaliation following Washington’s proposal of additional 100% tariffs on Chinese goods.

Silver’s Surge & Pullback

Silver proved even more volatile, surging past US $53.54 in intraday trading before pulling back as momentum cooled. Market participants suggest the wild swings reflect speculation and supply tightness, and caution that the squeeze may be reaching an inflection point.

Outlook & Risks

The rally underscores how sensitive the precious metals space has become to macro and geopolitical developments. If the Fed delivers on rate cuts and trade tensions worsen further, gold could sustain upward momentum. But risks remain: a hawkish pivot by the Fed, easing in geopolitical strife, or technical corrections could reverse the gains. As the global economy faces mounting uncertainties, gold’s role as a flight-to-quality asset is being tested—and, by today’s moves, reaffirmed.

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