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Gold Price Leaps to New Record Highs Above $2100 Ahead of Fed Interest-Rate Testimony as Nato-Russia Tensions Worsen

GOLD PRICES recorded new all-time highs at London's benchmarking auctions on Monday before rising through $2100 in spot-market trading as tensions worsened further between Moscow and the Nato military alliance over Ukraine, while Donald Trump won the Supreme Court's approval to stay on the ballot for November's presidential election and expectations for an interest-rate cut by the Federal Reserve rebounded from last week's drop, write Atsuko Whitehouse and Adrian Ash at BullionVault.
The spot gold price in US Dollar terms traded at $2098 per Troy ounce around Monday's 3pm London fix, more than $15 above the fresh record high set at this morning's AM auction.
London gold prices then came within 10 cents of $2200 – some 1.1% below the spot market's all-time peak of early December – while silver hit new 2024 spot-market highs at $23.80 but platinum and palladium prices held little changed from the weekend, trading near multi-month and multi-year lows respectively.
"Yet again gold reinforces its diversification appeal with the new high reached today," says Ruth Crowell, CEO of the London Bullion Market Association.
Following Friday's news of slower US inflation plus weaker-than-expected manufacturing activity and consumer sentiment, the move to new gold-price records comes ahead of a busy week for economic data and comment, with the chair of the Federal Reserve Jerome Powell testifying to Congress on Wednesday, US employment data due Friday, and China's Communist parliament holds its annual National People's Congress meeting for 2024.
Chart of spot market gold bullion price. Source: BullionVault
Friday's start to this move came on a surge in Comex gold futures and options trading after that day's 3pm London fix and following the weaker US economic data.
Comex futures and options volume jumped almost 80% from Thursday's level to the heaviest turnover since 13 October, when gold prices jumped 1.9% as the conflict between Israel and Hamas worsened.
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"The rally was...possibly on account of short-covering as a jump this big in just a short period suggests that some of the shorts were caught off-guard," says analyst Edward Meir at commodity-Marex, a UK-based financial services company, specialised in commodity markets.
In the lead-up to the gold price jump starting last Friday, hedge funds and other leveraged speculators in Comex gold futures and options expanded their bullish betting by 0.4% on gold as a group from a week earlier but increased their bearish betting by 2.8%. 
Overall, this pushed up the net long position of Managed Money traders very slightly to keep it 1/4 below last year's average. 
Gold bullion in China – the precious metal's No.1 consumer nation – today hit a fresh benchmark high in Chinese Yuan at ¥489 per gram, albeit with the premium to London prices for bullion delivered on the Shanghai Gold Exchange dropping to a 2-month low around $30 per Troy ounce, still over 3 times the typical incentive for new imports.
Wholesale bullion in terms of the UK Pound and the Euro also surged, setting fresh London benchmark records and hitting 3-month intraday high in spot market trading above £1669 and €1950 per ounce respectively.
The London gold price in Japanese Yen also reached all-time highs, touching ¥10,250 per gram in Monday's intraday trading.
"Quite frankly, if Ukraine falls, I really believe that Nato will be in a fight with Russia," said US Defense Secretary Lloyd Austin late last week to the Republican-led House Armed Services Committee. 
Moscow's foreign ministry today summoned the German ambassador after a leaked discussion between senior military officers suggested that Russia's "eternal opponents are planning a war" against it, according to Kremlin officials in President Putin's cabinet.
With Donald Trump saying he will end the war in Ukraine within 24 hours of winning a second term as President, the US Supreme Court today ruled that the State of Colorado doesn't have the authority to block him from appearing on ballot papers because of allegations he was directly involved in causing the January 6th rioting against Joe Biden's election in 2021.
The Dollar index – a measure of the US currency's value versus its major peers – slightly declined to a 1-month low today after falling 0.3% last Friday. Ten-year US Treasury yields – a benchmark rate for government as well as many finance and commercial borrowing costs – edged higher from a 3-week low.
The market consensus for December 2024 interest rates fell to 4.46% last session due to the weaker economic data, after briefly topping the Fed's own 4.60% forecast level last Tuesday.

Atsuko Whitehouse is the Head of the Japanese Market at BullionVault and the Editor of Japanese GoldNews.

See all articles by Atsuko Whitehouse here.

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