Unstoppable run takes gold higher, higher, higher ...

Gold and silver touched all-time highs as fears about credit quality in the economy and heightened US-China frictions strengthened demand for havens, while investors piled into bets that the Federal Reserve could deploy an outsized rate cut this year.

Bullion rose as much as 1.2 per cent to $US4379.96 an ounce on Friday — putting it on track for its biggest weekly gain since 2020 and extending a breakneck rally that began in August. The buying spree has spilled over into other precious metals, with silver edging higher to an all-time high of $US54.3775 an ounce before paring gains.

Broader markets were jolted as two US regional lenders disclosed problems with loans involving allegations of fraud, adding to concern that more cracks are emerging in borrowers’ creditworthiness. That boosted demand for havens such as gold and silver.

Traders also are piling into wagers on at least one jumbo US rate cut by year-end, while Fed chair Jerome Powell signalled this week the central bank is on track to deliver another quarter-point reduction this month.

The ongoing US government shutdown has delayed the release of key data, but any resolution is expected to unleash a flood of information on the evolving state of the economy, which may provide evidence of weakness to support more rate cuts. That’d benefit bullion as it doesn’t pay interest.

Gold has also been bolstered by concerns over a resurgence in trade frictions, including those between Washington and Beijing.

On Thursday, China’s Commerce Minister Wang Wentao blamed the recent escalation in tensions on the US and warned against decoupling. Late last month, the Commerce Department published a rule that widened the application of sanctions to companies affiliated with blacklisted Chinese firms.

The precious metal has surged more than 65 per cent this year, underpinned by central bank buying, inflows to exchange-traded funds and soaring demand for haven assets in the face of geopolitical and trade tensions, rising fiscal and debt levels, and threats to the Fed’s independence.

The silver market, meanwhile, has been gripped by a lack of liquidity in London, sparking a worldwide hunt for the metal and driving benchmark prices to soar above futures in New York.

Over the past week, more than 15 million ounces of silver have been withdrawn from warehouses linked to the Comex futures exchange in New York. Much of that is likely headed to London, where it should help ease market tightness — though solid ETF inflows of almost 11 million ounces over that period have further eroded London stocks.

Spot gold was up 0.8 per cent to $US4362.96 an ounce at 6.30am in Singapore. Silver edged down 0.3 per cent after its latest peak. Platinum gained and palladium was steady.

Bloomberg