Gold and silver prices soared to new all-time highs on Thursday as mounting global uncertainty and intensifying trade tensions between the United States and China sent investors rushing toward safe-haven assets. In late London trading, gold reached $4,270 per ounce and silver climbed to $53.90 per ounce, marking the ninth record-setting session in just 12 trading days this month. The rally comes even as global stock markets also hit new peaks, underscoring the growing unease driving markets worldwide.
The surge follows President Donald Trump’s declaration that America is now in a “trade war” with China, sparking fears of further disruption to global supply chains and inflationary pressures. Precious metals, traditionally viewed as a hedge against both inflation and geopolitical instability, are experiencing their sharpest monthly rise in years.
Fastest Gold Rally Since 2020
Gold’s 15.2% gain since mid-September represents the fastest one-month climb since March 2020, when the onset of the COVID-19 pandemic caused market chaos and disrupted gold flows between London and New York. The only comparable surges in modern history came during August 2011, amid the Eurozone debt crisis and the downgrade of U.S. Treasury debt, and during the 2020 pandemic panic.
Analysts attribute the latest rally to a mix of macroeconomic fears, currency volatility, and speculation about long-term financial realignment. Morgan Stanley’s Chief Investment Officer Mike Wilson recently recommended that investors allocate up to 20% of their portfolios to gold, citing inflation risks, stock market bubbles, and “Dollar debasement.”
“Gold’s rally may be linked to a global financial shift,” Morgan Stanley’s Global Investment Committee wrote, suggesting that central banks are diversifying away from the U.S. dollar in favor of other assets, including stablecoins and emerging digital currencies.
Market Strains and Investor FOMO
In Asia, gold demand is surging ahead of India’s Diwali festival, a traditionally strong period for jewelry purchases. “We’re seeing a run on gold, especially on coins and bars,” said Ajoy Chawla, CEO of Tata Group’s jewelry brand Tanishq. “People are buying because of FOMO — they think prices will go even higher. I wouldn’t be surprised if we run out of coins soon.”
The Shanghai Futures Exchange and the Shanghai Gold Exchange issued a joint warning urging traders to “invest rationally” and manage risk carefully as volatility increases. Lease rates to borrow silver in London — the global hub for precious metal trading — are holding near 25% annualized, a historically high figure following last week’s spike toward 40%.
Such extreme borrowing costs signal tightening liquidity and intense speculative pressure on the metals market, reminiscent of conditions seen during past financial crises.
Trade War and Political Volatility Fuel the Rally
The renewed escalation between Washington and Beijing is adding further momentum to gold’s surge. After China restricted exports of rare earth elements, Trump retaliated by announcing 100% tariffs on all Chinese imports. The two countries have since exchanged additional trade measures, including higher port fees on vessels from each other’s ports.
“Uncertainty created by Sino-U.S. trade friction, political instability, and global economic risks is supporting gold prices,” said Li Mingyu, senior gold analyst at Xinhu Futures Research Institute. Li also cited factors such as the U.S. government shutdown, political turmoil in France and Japan, unrest in Indonesia and Argentina, and the continuing Russia-Ukraine conflict as key contributors to the “flight to safety.”
As the federal shutdown enters its third week and inflation pressures persist, investors are betting that the Federal Reserve may soon be forced to cut interest rates again—further boosting demand for non-yielding assets like gold and silver.
Outlook
With the geopolitical landscape fragmenting and economic indicators clouded by uncertainty, analysts say precious metals could continue their ascent. “The market remains optimistic about the Fed’s interest rate cuts,” Li said. “But more importantly, investors are looking for protection from global instability and monetary volatility.”
As gold and silver prices enter uncharted territory, the world’s oldest stores of value are once again becoming the most sought-after assets in modern finance.
