(Bloomberg) — Gold powered to a record in the week’s opening session after flows into exchange-traded funds hit a three-year high, with investors betting that the Federal Reserve’s rate-cutting cycle has further to run. Silver also rose, with year-to-date gains topping 50%.
The more expensive metal spiked above $3,720 an ounce, building on a run of five weekly gains, as the Fed cut rates and flagged further easing through to year-end. On Friday, bullion-backed ETFs surged 0.9%, the most in percentage terms since 2022, according to data compiled by Bloomberg.
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Gold and silver have been among the year’s best performing major commodities on a broad confluence of supportive factors, as the Fed eases policy, central banks bolster their reserve holdings, and lingering geopolitical tensions sustain a bid for havens. Major banks including Goldman Sachs Group Inc. have flagged their expectations for further gains.
“Technicals are looking pretty strong, and expectations are rising for deeper rate cuts,” said Soni Kumari, commodity strategist at ANZ Group Holdings Ltd. In silver, “resistance at $43 an ounce was broken, while gold powered through $3,708 an ounce — suggesting prices will continue to push higher.”
This week, traders will parse data including US personal consumption expenditures for August. The Fed’s preferred measure of underlying inflation likely grew at a slower pace, which may strengthen the case for more cuts. In addition, Fed Chair Jerome Powell is due to speak on the outlook on Tuesday.
For some, bullion’s rapid climb in the last month is a reason to be cautious.
“The gold price was overbought after climbing by more than 10% in the last five weeks,” analysts at Heraeus Precious Metals GmbH & Co KG said on Monday. “That raises the chance of a period of consolidation so the price could trade sideways to lower for a while.”
Silver rallied harder than gold on Monday, possibly with support from bullish options trades. The daily volume of IShares Silver Trust options surged to 1.2 million on Friday — the highest since April 2024, with call options spiking.
Spot gold was 0.9% higher at $3,717.60 an ounce at 10:20 a.m. in New York. The Bloomberg Dollar Spot Index was down less than 0.1%. Silver rose 1.1% after adding as much as 1.7% to just over $43.80 an ounce, while platinum and palladium were mixed.