By bizn_fun 
Introduction: Gold climbs to new record high
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Gold keeps climbing, driven by geopolitical jitters, expectations of interest rate cuts, and anxiety that financial markets could have risen too high.
The spot price of gold has hit $3,759 per ounce this morning, a new record. It has gained 9% so far this month, and a blistering 43% since the start of this year.
Gold is benefiting from its traditional role as a safe-haven asset – and there’s plenty for investors to worry about right now, from the Ukraine war and conflict in the Middle East to fears that inflation could get out of hand again.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says “tense geopolitical risks in Ukraine and Gaza” are helping gold extend its rally, explaining:
For Gaza, an increasing number of developed nations are recognizing the state of Palestine, straining relations with Israel and the US – the latest being France.
In Europe, meanwhile, countries close to Russia’s border worry that Moscow is testing NATO’s nerves with repeated airspace violation.
Fears that Donald Trump could undermine America’s fiscal health by driving up borrowing, and his undermining of the US Federal Reserve, are also making gold look an attractive safe place for traders.
Central banks have been piling into gold this year too, as they look to reduce their dependency on the US dollar.
Gold’s major flaw as an investment asset is that it doesn’t pay a yield (unlike cash deposits which earn income, or bonds which pay a coupon to investors). But if central banks keep cutting interest rates, that’s less of a disadvantage for gold.
Also coming up today
Donald Trump is to meet with Argentina’s president later today, over a possible financial lifeline for Javier Milei’s government, which has been battling a run on the peso.
Investors will also be keen to hear from Federal Reserve chair Jerome Powell this afternoon, for hints as to how quickly the Fed might keep lowering borrowing costs following last week’s rate cut.
The agenda
-
8.30am BST: Sweden interest rate decision
-
9am BST: Eurozone flash PMI for September
-
9.30am BST: UK flash PMI for September
-
10am BST: Bank of England chief economist Huw Pill at fireside chat at the Inaugural Pictet Research Institute Symposium
-
11am BST: CBI industrial trends
-
5.35pm BST: Federal Reserve chair Jerome Powell speaks in New York
Key events
Here’s a chart showing how much gold has risen, or fallen, each year since the late 1960s, in dollars.
Gold on track for best year since Iranian Revolution
This morning’s gains mean gold is still on track for its best year since 1979.
Gold has risen from $2,626 per ounce at the start of January to $3,759 per ounce (a new record) today, a gain of 43%.
That’s beats 2024, when it rose by 27%.
But it needs to rise rather higher to beat 1979, when the gold price more than doubled – from $226 to $512 per ounce – during a sharp bout of global inflation and a weakening dollar.
Jim Reid, market strategist at Deutshe Bank, told clients this morning:
The other asset class to reach yet more record highs was gold, which rose +1.67% to $3,747/oz and now up more than +42% on a YTD basis. So that now leaves gold prices well on track for their strongest annual performance since 1979, when prices surged +127% against the backdrop of the oil crisis after the Iranian Revolution, which caused a fresh surge for inflation and led investors to seek out gold as a hedge against that.
In real terms gold prices didn’t actually cross the highs seen around this time until earlier this month some 45 years later.
Introduction: Gold climbs to new record high
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Gold keeps climbing, driven by geopolitical jitters, expectations of interest rate cuts, and anxiety that financial markets could have risen too high.
The spot price of gold has hit $3,759 per ounce this morning, a new record. It has gained 9% so far this month, and a blistering 43% since the start of this year.
Gold is benefiting from its traditional role as a safe-haven asset – and there’s plenty for investors to worry about right now, from the Ukraine war and conflict in the Middle East to fears that inflation could get out of hand again.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says “tense geopolitical risks in Ukraine and Gaza” are helping gold extend its rally, explaining:
For Gaza, an increasing number of developed nations are recognizing the state of Palestine, straining relations with Israel and the US – the latest being France.
In Europe, meanwhile, countries close to Russia’s border worry that Moscow is testing NATO’s nerves with repeated airspace violation.
Fears that Donald Trump could undermine America’s fiscal health by driving up borrowing, and his undermining of the US Federal Reserve, are also making gold look an attractive safe place for traders.
Central banks have been piling into gold this year too, as they look to reduce their dependency on the US dollar.
Gold’s major flaw as an investment asset is that it doesn’t pay a yield (unlike cash deposits which earn income, or bonds which pay a coupon to investors). But if central banks keep cutting interest rates, that’s less of a disadvantage for gold.
Also coming up today
Donald Trump is to meet with Argentina’s president later today, over a possible financial lifeline for Javier Milei’s government, which has been battling a run on the peso.
Investors will also be keen to hear from Federal Reserve chair Jerome Powell this afternoon, for hints as to how quickly the Fed might keep lowering borrowing costs following last week’s rate cut.
The agenda
-
8.30am BST: Sweden interest rate decision
-
9am BST: Eurozone flash PMI for September
-
9.30am BST: UK flash PMI for September
-
10am BST: Bank of England chief economist Huw Pill at fireside chat at the Inaugural Pictet Research Institute Symposium
-
11am BST: CBI industrial trends
-
5.35pm BST: Federal Reserve chair Jerome Powell speaks in New York