WASHINGTON (dpa-AFX) - Gold prices moved higher on Tuesday to scale a new peak amid renewed China-U.S. trade tensions along with continuing bets on the U.S. Federal Reserve cutting rates later this month.
Front Month Comex Gold for October delivery climbed $30.10 (or 0.73%) to $4,138.70 per troy ounce.
Front Month Comex Silver for October delivery rose 18.40 cents (or 0.37%) to $50.314 per troy ounce.
Notably, the respective prices are new record highs for gold and silver, both of which have been up for three consecutive sessions.
Last weekend, U.S. President Donald Trump expressed strong displeasure over China's moves to tighten up controls on its rare earth mineral exports. These critical elements are essential for the manufacturing and technology sectors.
Trump went on to state that there was no point in meeting the Chinese President Xi Jinping, as earlier planned, in South Korea this month. As a retaliation, Trump announced a new 100% tariff on Chinese exports to the U.S., set to take effect from November 1.
As the escalation deepened, both nations started to charge special port fees on each other's ships beginning today.
The U.S. stated that it intends to protect American shipping companies. However, Chinese levies are a retaliatory response, targeting ships owned or built by the U.S. or carrying the U.S. flags.
China sanctioned five U.S. units of South Korean shipbuilder Hanwha Ocean Company, signaling a building up of trade tensions.
To assuage concerns, U.S. Treasury Secretary Scott Bessent stated that the meeting between two president is set to happen as planned but there is no official confirmation from the Chinese side.
In addition, the new U.S. tariffs on imported timber, kitchen cabinets, and upholstered furniture previously announced by Trump also take effect today. The tariffs affect China, as it is a bulk exporter of these products to the U.S.
Gold continues to benefit by the standoff between the world's two major economies.
In the U.S., the shutdown entered day number 14 today.
So far, 750,000 federal employees are out of work with no pay. The White House is planning for huge layoffs across all departments. Many employees have been served with 'Reduction in Force' notices.
The Senate votes for an eighth time today. As both the Republican and Democratic parties have toughened their positions, no resolution is likely expected.
Traders feel that the safe-haven allure for gold continues due to the shutdown's impact on the nation's economy.
While most official data has been delayed due to the shutdown, CME Group's FedWatch Tool still indicates a 96.7 percent chance the Fed will lower rates by another quarter point at its October 28-29 meeting.
In Russia, an oil terminal at Feodosia in the Russian-occupied Crimean Peninsula was burning on Monday after an attack by Ukrainian drones. Since August, Ukraine has launched more than 30 strikes on Russian energy installations.
Russian forces attacked Kharkiv, Ukraine's second-largest city, with guided bombs on Monday, cutting power supply to around 30,000 consumers.
Trump stated that he might consider Ukraine's request for long-range Tomahawk missiles if it could end the war.
Analysts maintain that strategic military aid to Ukraine by the U.S. could provoke Russia as it has already warned and discouraged the U.S. from doing so.
The deteriorating Russia-Ukraine conflict is helping gold prices on the upside.
In the Middle East, the first phase of the Gaza Peace Plan, (proposed a week before by Trump) has ended with Israel and Palestinian Hamas releasing all prisoners and hostages, respectively.
As of now, signs of stability returning to the war-torn region is positive for markets and oil transit. These developments limited gold from moving up rapidly.
As the yellow metal has gained around 57% year-to-date, economists say developments in U.S.-China trade relations, the U.S. shutdown, and the Russia-Ukraine war would dictate gold prices in the coming days along with Fed's decision on interest rates.
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