The worldwide rally in precious metals proceeded on Tuesday, demonstrating a series of financial investors' anxieties. On spot markets, gold's value surged to a record-breaking $4,186 per troy ounce, while silver also reached a historic high at $53.59 per ounce. The metals withdrew from these highs throughout the session but maintained an impressive 12% and 21% increase respectively in just the past month.
This upwards trend comes after a trading session on Monday which saw silver surpass its previous record set in 1980 when the Hunt brothers nearly monopolized the global silver market. So far this year, silver has leaped 78%, with gold closely following with a 58% elevation.
Investors frequently resort to precious metals as a safeguard against risks linked to economic and geopolitical instability. The drivers that have triggered the latest precious metals rally-specifically gold and silver-seem unlikely to dissipate soon, leading experts to believe that there's more altitude for precious metals. Some financial experts have recently suggested that investors should heighten their stake in precious metals as part of their diversified portfolios. Perceived for years as a financial safeguard against economic upheaval, precious metals are soaring amidst global uncertainties.
Top of the list recently is the global trade tension escalation. President Trump jolted financial markets last week, threatening a 100% increment in tariffs on China by Nov. 1. This was a countermeasure to China's resolution to limit exports of rare earth metals essential for various tech and industrial uses.
Further escalating tensions, China imposed sanctions on five U.S. sectors of the South Korea shipping firm, Hanwha Ocean Co., and both the U.S. and China initiated port fees on each other’s vessels. Additionally, the U.S. government shutdown, now entering its third week, poses new threats to consumer spending and economic growth.
These circumstances combined with the U.S. Federal Reserve’s consideration of another interest rate cut have favored precious metals, unlike bonds, which produce regular income. Also, despite the stock market hovering near record levels, its recent volatility seems to aid precious metals.
A recent survey from Bank of America revealed that global fund managers identified an AI bubble as the stock market's most substantial risk, possibly encouraging investors to diversify to other assets. The survey also showed that fund managers considered "Long Gold" the most crowded trade, outpacing "Long Magnificent 7."