By: Economic Middle east

Gold prices surged to a new record high on Thursday, marking their fifth consecutive session of gains, as investors sought safety amid escalating trade tensions between the world’s two biggest economies, a U.S. government shutdown and growing expectations of interest rate cuts.

In Dubai, gold rates marked notable increases on Thursday, with 24-carat gold gaining AED3.5 to AED509.25 and 22-carat gold rising AED3.25 to AED471.5. Additionally, 21-carat gold rose AED3 to AED452, while 18-carat gold gained AED2.75 to AED387.5.

Globally, spot gold climbed 0.8 percent to a historic $4,241.77 per ounce at 3:11 GMT before declining to $4,238.05 as of 4:34 GMT. Meanwhile, U.S. gold futures for December delivery rose 1.21 percent to $4,252.40.

U.S. and China’s trade tensions escalate

Gold prices rose as U.S. officials on Wednesday condemned China’s broadened export restrictions on rare earths, calling them a threat to global supply chains and hinting at possible retaliatory action. The criticism came a day after both nations imposed reciprocal port fees on each other’s vessels.

U.S. Treasury Secretary Bessent said Washington had additional tools at its disposal, including export restrictions, should Beijing move forward, and was also prepared to impose tariffs on China over its imports of Russian oil, provided European allies participated.

Analysts noted that the Federal Reserve’s comments highlighting an increased likelihood of future rate cuts were supportive for the market, while U.S. President Donald Trump’s decision to describe the situation with China as a trade war further strengthened gold’s upward momentum.

Increased rate cut bets boost gold prices

The Federal Reserve’s Beige Book, released on Wednesday, showed that U.S. economic activity was little changed in recent weeks, with businesses citing slower demand and lingering cost pressures. The report also noted early signs of cooling in the labor market. The subdued tone supported expectations that the Fed will move to support growth, further boosting gold’s appeal as yields retreat.

Fed’s Jerome Powell said on Tuesday that a sharp slowdown in hiring poses a growing risk to the U.S. economy, suggesting that the central bank will likely cut its key interest rate twice more this year. Investors are widely expecting a 25-basis-point rate cut at the upcoming U.S. Federal Reserve meeting, with another likely in December.

Gold prices, which offer no yield, have surged 61 percent so far this year, driven by a mix of factors such as geopolitical tensions, expectations of lower interest rates, central bank purchases, de-dollarization efforts and strong inflows into gold-backed exchange-traded funds.

Traders will take more cues from Fed officials later on Thursday as policymakers Michael Barr, Stephen Miran, Christopher Waller, and Michelle Bowman are set to speak.

Gold to reach $4,400 per ounce by the end of the year

ANZ analysts said that gold’s rally is likely to continue amid mounting geopolitical and economic uncertainty and the U.S. Federal Reserve’s policy easing.

“While comparisons are being made to the 1980’s price peak, the current price rise is underpinned by structural drivers, indicating that elevated prices will likely sustain,” analysts wrote.

ANZ expects gold prices to reach $4,400 by the end of 2025 and peak near $4,600 by June 2026 before easing in the second half of that year.

Meanwhile, a Treasury official warned on Wednesday that the two-week-old federal government shutdown could cost the U.S. economy up to $15 billion per week in lost output.

Other precious metals

As gold prices surged to a new all-time high, the precious metals market saw upward momentum on Thursday. Spot silver gained 0.09 percent to $53.12, while platinum surged 0.63 percent to $1,664.65. In addition, palladium gained a notable 0.63 percent to $1,545.78.