Gold is trading at a gain of more than 1% in mid-European trading today, Wednesday, October 8, recording a new record high of $4,040 per ounce, supported by rising expectations of a US interest rate cut and increased demand for safe havens amid the ongoing US government shutdown. Gold’s gains exceed 54% since the beginning of the year, with the yellow metal trading up about 1.37% at $3,438 per ounce, while silver is trading at $48.79 per ounce, up 2.02%, approaching its all-time high of $49.75, set in April 2011.
The yellow metal, the world’s leading safe-haven asset, is the best performing asset class in 2025, benefiting from continued political and economic uncertainty. The US government shutdown, which has been ongoing since last Wednesday and enters its eighth day today, continues to delay economic data. This is in addition to the ongoing conflict in the Middle East, the war in Ukraine, and political unrest in France and Japan.
On a related note, official demand and holdings of gold exchange-traded funds (ETFs) are a major factor behind gold’s gains, as they continue to grow as a hedge against escalating tensions. Total investor holdings of gold-denominated ETFs expanded to their highest level in three years, while central banks continue to buy the yellow metal.
In addition to geopolitical tensions, gold is receiving support from rising expectations that the US Federal Reserve will cut interest rates in October and December. Markets are pricing in a 94% and 81% probability of a 25 basis point rate cut in October and December, respectively, according to the CME’s FedWatch tool. This is an increase of more than 15% compared to last week’s expectations. Platinum, in turn, is trading at $1,646, up 1.74%, while palladium is up about 3.98%, trading at $1,391.