The Rise Continues: The Price of Gold Jumped to New Records

The price of gold jumped to a new record in the first month of autumn, once again exceeding the $3,500 level. The price is being pushed higher by expectations of interest rate cuts and the worsening financial problems of major powers.

Gold prices jumped to $3,508 an ounce in Asian trading tonight, a new intraday record. Yesterday’s closing price was $3,447.4, also an all-time record. In euros, gold reached €2,998 an ounce, a record set in April of €3,036.

The previous intraday record was in mid-April this year, when gold surged to $3,500 after US President Donald Trump imposed global tariffs. The price then remained at that level for a very short time. This time, the rise appears to have been on a slightly more sustainable footing.

The price of silver rose to $40.8 an ounce, the highest level since 2011, when the record price of $49.8 also dates back to that time. Last week, it was revealed that the Saudi Arabian central bank had also invested tens of millions of dollars in silver .

In the Short Term, the Price of Gold is Influenced by the Federal Reserve

Gold has been buoyed in recent weeks by expectations that the Federal Reserve will soon begin cutting interest rates. When interest rates fall, this usually has a positive effect on the price of gold. In addition, lower interest rates would also increase the amount of money in the economy (monetary inflation), which could also start to manifest itself in rising consumer prices.

The fact that Donald Trump is intensely attacking the independence of the Federal Reserve is also of concern to the markets.

Looking at the technical picture, the price of gold exceeded a very important resistance level (the $3,440 level). If this level is decisively exceeded, we will probably see new records and a continuation of the rise. The fact that gold reached these levels so quickly came as a surprise. But as previously mentioned in several previous analyses – a long-term bull market usually surprises on the upside (the price rises earlier and more aggressively than expected).

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Currently, gold is trading at $3,478 per ounce. If the $3,500 level (April highs) is decisively broken, the price could rise to $3,650-3,700 fairly quickly. To do this, the trading day would need to close above the $3,500 level.

There are several reasons for the long-term rise in gold and silver prices. Record demand from central banks, geopolitical tensions, tariffs, growing demand from Asia, and a significant deterioration in the state of national finances have contributed to this.

The Financial Situation is Worsening in Both the UK and France

The deterioration of national finances has begun to be clearly reflected in market movements in recent days. Among major Western countries, the USA, France and the United Kingdom are currently in the worst financial position.

The UK’s 30-year government bond yield rose today to its highest level since 1998. This is a telling sign of the current state of the country’s finances. It also shows that the markets do not trust the ruling Labour Party. There is already a large hole in the UK’s budget, which economists say could lead to the biggest debt crisis in half a century as early as the autumn.

As the country has to take on new debt at ever higher interest rates, it risks a debt spiral resulting from rising interest payments

France’s budget is also in deep deficit and Prime Minister Francois Bayrou is facing a government collapse. The French parliament will hold a confidence vote on the prime minister next Monday. The yield on France’s 30-year bonds rose to a 16-year high this week.

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Germany has also abandoned its austerity budget policy due to economic stagnation and rising defense spending. The yield on Germany’s 10-year bonds rose to a 14-year high this week. New loans must be taken out at ever-higher interest rates.

The Risk of a Debt Spiral is Growing

Borrowing is becoming increasingly expensive for major powers – at a time when national debts are at their highest levels since World War II. Interest rates are moving higher and higher. This threatens to push the economies of major powers into a debt spiral.

A debt spiral is a situation where high debt levels and budget deficits push up interest rates on national debt, and rising interest rates make the budget situation even worse.

This in turn pushes interest rates even higher, and the cycle repeats itself

History shows that the easiest way out of such a situation is to dilute the value of the currency. This helps to gradually get rid of debt, which in turn means that government bonds lose real value and the freed up capital flows into, among other things, the traditional reserve asset, gold.

This is one of the main factors that will continue to fuel the rise in the price of gold. It could be predicted that by 2030 the price of gold will reach the range of 6,000-7,000 dollars.