Record highs for gold and silver prices amid prospects of rate cuts and macroeconomic uncertainty

Gold tops $3,500 per ounce intraday, silver surpasses $40 per ounce

Demand rises in China, India as the dollar weakens

Gold and silver prices hit record highs as expectations of a September rate cut in the U.S. and rising macroeconomic and geopolitical uncertainty have increased concerns about the Fed's future.

Spot gold was at $3,475.33 per ounce on the London Metal Exchange on the 2nd (local time). This followed an early-session record high of $3,508.50 per ounce (4.89 million won). According to Reuters, gold has risen 32% so far this year.

Silver is outperforming gold. Spot silver surpassed $40 per ounce for the first time since 2011 and was trading at $40.49. It has risen more than 40% so far this year.

Money is flowing into exchange-traded funds (ETFs) that invest in gold and silver.

The world's largest gold ETF, SPDR Gold Trust, said its gold holdings rose 1.01% to 977.68 tonnes over the past weekend. This is the highest level since August 2022.

Silver-backed ETFs also saw seven consecutive months of increases in silver holdings as of the end of August. This has reduced silver inventories on the London Metal Exchange, amplifying the price gains.

Beyond investment demand, silver's industrial use is rising in clean energy technologies, including solar panels.

The strength in gold and silver is being supported by a weaker U.S. dollar, which has further boosted the purchasing power of major consumers such as China and India.

With the likelihood of a Fed rate cut in September increasing, President Trump's intensified attacks on the Fed have sparked concerns about the dollar, fueling demand for gold.

UBS Group strategist Jonny Teves said, "As the Fed's rate cut approaches, investors increasing allocations to gold assets are driving the price up." Teves added, "A low-rate environment, weak economic indicators, macroeconomic uncertainty and geopolitical risk strengthen gold's role in portfolios."

Markets are analyzing the potential impact on future Fed policy after President Trump removed Fed Governor Lisa Cook from the central bank. A federal appeals court ruling last weekend that President Trump's global tariffs were illegal under the National Emergencies Act is also seen as a factor increasing uncertainty.

Christopher Wong, currency strategist at Overseas Chinese Bank (OCB), said, "Gold broke through $3,500 in intraday trading in April, so we need to see if it closes above that level today; if it does, it will provide momentum." He noted, "The re-emergence of new geopolitical risks and policy uncertainty would be positive for gold."

In a Reuters quarterly poll conducted in July, analysts had forecast that gold would average $3,220 this year and $3,400 in 2026.

Another precious metal, platinum, fell 0.2% to $1,397.06, while palladium dropped 1.5% to $1,120.21.

Jeong-a Kim, guest reporter kja@hankyung.com