Gold prices shine as economic storm clouds gather

(Sharecast News) - Gold prices continued to climb on Wednesday, hitting fresh highs, on the back of ongoing political and economic concerns. Having broken past $3,500 an ounce on Tuesday, as at 0930 BST gold was trading at $3,559. It has now put on 41% over the last year.

Investors are retreating to the safe haven asset on the back of mounting political and economic risks, many of which are centred on the US. In particular, Donald Trump's ongoing clashes with the Federal Reserve - including attempting to remove governor Lisa Cook - has raised concerns over the central bank's independence.

Market watchers now increasingly expect an imminent interest rate cut, despite the likely impact of tariffs on inflation. The dollar has also weakened.

Bonds, meanwhile, have been aggressively sold off globally, with the yield on the 30-year US Treasury reaching 5%.

Kathleen Brooks, research director at XTB, said: "The gold price is reacting to fears about stagflation: high inflation, lower interest rates in the US and sluggish growth.

"Overall, while the bond market remains volatile, we expect gold to remain in vogue."

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Where does capital go when both bonds and equities see heavy outflows? Alternative assets. Gold is breaking records, silver is extending gains and safe haven demand is spilling into the dollar, despite longer-term doubts over its status."