Gold, silver prices hit all-time highs amid geopolitical tensions
What's the story
Gold prices have surged past the $4,600 per ounce mark for the first time in history. The spike comes as a result of geopolitical and economic uncertainties, along with rising expectations of US interest rate cuts. Spot gold rose by 1.3% to $4,469.49 per ounce at 02:03 GMT today before hitting an all-time high of $4,600.33 earlier today.
Market response
US gold futures also witness significant rise
Along with spot gold, US gold futures for February delivery have also witnessed a significant rise. The futures contract firmed 2% to $4,591.10 per ounce. Kelvin Wong, a senior market analyst at OANDA, said geopolitical risk is the main driver behind today's bullish momentum in both the gold and silver markets.
Economic factors
Iran unrest and US employment growth impact market
The unrest in Iran, which has claimed over 500 lives, is one of the geopolitical factors impacting the market. Tehran has threatened to target US military bases if President Donald Trump goes through with his renewed threats against the country. On the economic front, US employment growth slowed more than expected in December amid job losses across construction, retail and manufacturing sectors.
Rate expectations
Investors anticipate Federal Reserve rate cuts
Despite the slowdown in employment growth, a fall in the unemployment rate has indicated that the labor market isn't deteriorating rapidly. Investors are now expecting at least two Federal Reserve rate cuts this year. A softer job market increases the likelihood of these cuts. The dollar has also retreated from its strongest level in a month, further supporting the rally in precious metals.
Market trends
Precious metals perform well in low-interest-rate environment
Non-yielding assets like gold and silver usually perform well in a low-interest-rate environment and during geopolitical or economic uncertainties. Spot silver rose 3.5% to $82.72 per ounce after hitting an all-time high of $83.96 earlier today. Platinum also added 3.2% to $2,345.40 per ounce after reaching a record peak of $2,478.50 on December 29 last year, while palladium gained 3.3% to $1,875.68 per ounce today itself.