Gold prices breached the $4,200 per ounce mark on Wednesday for the first time as rate cut hopes boosted sentiments.
Silver prices on COMEX rose more than 1%, and hovered around the $51 per ounce level.
On the other hand, oil prices moved slightly higher on Wednesday due to lower-level buying.
Meanwhile, copper prices also rose on hopes of further interest rate cuts by the US Federal Reserve.
Gold climbs to new high
On Wednesday, gold prices surged past $4,200 per ounce, marking a new record high.
This continued rally is attributed to increasing expectations of interest rate cuts and heightened geopolitical tensions, which are driving investors towards the perceived safety of gold.
“The upside momentum showed little sign of slowing, despite a daily MACD which suggests the metal is very overbought,” said David Morrison, senior market analyst at Trade Nation.
Yet every minor dip was met with renewed buying, underlining the strength of sentiment currently dominating the gold market.
Several factors contribute to gold’s sustained strength.
These include the potential for reduced interest rates, safe-haven demand amidst concerns about tariffs and the US-China trade war, and the desire to diversify away from fiat currencies, especially the US dollar.
Fed Chair Jerome Powell’s dovish remarks on Tuesday, describing the US labour market as being in “low-hiring, low-firing doldrums,” led to a slip in the dollar against other currencies.
This environment, characterised by low interest rates, is beneficial for gold.
Gold, a non-yielding asset, traditionally serves as a hedge against inflation and uncertainty.
Meanwhile, the silver contract on COMEX was at $51.190 per ounce, up 1.1%, while platinum was up 0.5% at $1,683.55 an ounce.
Oil rises on lower-level buying
Oil prices had climbed slightly as investors resorted to lower-level purchases after the commodity hit more than five-month lows in the previous session.
The decline was attributed to trade tensions between the US and China, and the International Energy Agency’s forecast of a supply surplus next year.
The trade dispute between the US and China, the world’s two largest oil consumers, has intensified in the past week.
Both nations have implemented additional port fees on cargo ships, a retaliatory measure that threatens to disrupt global freight flows and affect key oil routes.
Last week, China declared an increase in rare earth export controls.
This announcement was met with a threat from US President Donald Trump to escalate tariffs on Chinese goods to 100% and to tighten software export restrictions, effective November 1.
The IEA announced on Tuesday that the global oil market is projected to experience a surplus of up to 4 million barrels per day next year.
This revised forecast, higher than previous estimates, is attributed to increased output from OPEC+ and other producers, coupled with consistently sluggish demand.
Following the news, front-month WTI dropped below $57.50, reaching its lowest trading level since early May.
“Technically, there’s very little in the way of support until WTI approaches $55 per barrel – a level that acted as support in April and May this year. The daily MACD is negative but not oversold by any means,” Morrison said.
But given the sharp downside move over the past three weeks, traders should be aware that a corrective bounce could come out of nowhere.
Base metals
Copper prices have seen significant fluctuation this week, ranging from a low of $10,480 to a high exceeding $10,850.
The substantial backwardation in nearby copper spreads has moderated somewhat, with the cash-3m spread closing at $55.9, a notable decrease from over $200 earlier in the week, according to Neil Welsh, Head of Metals at FCA-regulated multi-asset brokerage Britannia Global Markets.
Despite this, copper is currently outperforming other base metals, showing an approximate 1.2% increase this morning, as most of the index began Wednesday’s trading session positively.
Stocks rose on optimism over another Fed rate cut after Jerome Powell’s remarks.
Freeport McMoRan Inc. is planning to move away from the standard benchmark pricing system for its global sales of mined copper ores.
This strategic shift aims to safeguard the profitability of smelters.
According to Javier Targhetta, Freeport’s top commercial executive, the company will likely pursue individual supply agreements.
These deals are intended to better protect smelters’ profit margins, particularly if the benchmark price experiences further declines.
Targhetta voiced apprehension regarding the substantial drop in processing fees, characterising recent spot transactions as “nonsense.”
He also explicitly stated that Atlantic Copper would not agree to a zero tolling fee.
Meanwhile, Codelco, a leading copper supplier, reportedly intends to charge major European clients a premium of $325 per ton.
Welsh said:
If accepted, that would be a sizable increase from the $234 premium negotiated by the Chilean producer for the past couple of years and slightly higher than what European producer Aurubis plans to charge for 2026.
At the time of writing, the three-month copper contract on the London Metal Exchange was at $10,638 per ton, up 0.4%.
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