Spot gold rose 1.3% to $4,195.35 an ounce as of 1:57 p.m. ET (1:57 p.m. Japan time), after hitting a record high of $4,217.95.
US gold futures for December delivery rose 0.9% to settle at $4,201.60.
“Metal prices are falling and it looks like they’re not going to let up… With the US-China trade tensions rekindling in recent days, investors have even more reason to hedge their long-term investments in equities by diversifying into gold,” said Fawad Razaqzada, market analyst at City Index and FOREX.com.
Gold has soared more than 60% this year due to a combination of factors including geopolitical tensions, bets on interest rate cuts, central bank buying, de-dollarization and strong ETF inflows.
“We’re only $800 away from the $5,000 handle, so we’re not going to bet on gold getting there eventually,” Razakzada said, adding that a short-term correction is likely to shake off weak hands and attract fresh bullish buying.
The dollar fell against a basket of peers after Federal Reserve Chairman Jerome Powell struck a dovish tone on Tuesday, saying the U.S. labor market remained in a “low-employment, low-firing slump.”
Gold is considered a traditional hedge against uncertainty and inflation, and because it is a non-yielding asset, it thrives in low interest rate environments.
Traders are 98% priced in for a 25 basis point rate cut in October, followed by another rate cut in December, which is completely priced in 100% of the time.
In addition to the safety-flight move, US President Donald Trump said the US was considering cutting some trade ties with China after the two countries imposed retaliatory port fees this week.
Markets also note that the U.S. government shutdown has halted official statistics, which could cloud policymakers’ outlook overseas.
Silver rose 2.3% to $52.64, following Tuesday’s all-time high of $53.60.
Michael Brown, senior strategist at Pepperstone, said the silver rally was driven by tight supply in London, characterized by extreme backwardation and record lease rates, but could quickly reverse once the silver shortage eases.
Elsewhere, platinum rose 0.6% to $1,647.55 and palladium fell 0.2% to $1,523.66.
MNA/