Commodities wrap: gold soars to new high yet again; oil and silver prices rise sharply

Gold prices hit another record high on Tuesday on rising expectations of a rate cut by the US Federal Reserve this week. 

Oil prices also rose more than 1% due to fears of supply disruptions from Russia, one of the world’s largest exporters of crude. 

Silver prices on COMEX rose sharply on Wednesday as the rally continues on the back of gains in gold. 

Meanwhile, aluminium prices also rose with the metal comfortably breaching the $2,700 per ton. 

Gold hits another record high

Gold prices reached an all-time high on Tuesday, fueled by a weakening dollar.

This decline in the dollar was a result of anticipation surrounding potential rate cuts by the US Federal Reserve later in the week.

Currently, the COMEX gold contract stands at $3,733.70 per ounce, showing a change of 0.4% from the previous close. 

A weaker dollar makes commodities, including gold, more affordable for international buyers, consequently boosting demand.

On Monday, US President Donald Trump publicly pressured Fed Chair Jerome Powell to implement a more substantial cut to benchmark interest rates.

According to the CME FedWatch tool, traders are almost certainly anticipating a 25-basis-point (bps) rate cut at the conclusion of the two-day meeting on September 17. There is also a slight possibility of a 50 bps reduction.

Lower interest rates decrease the attractiveness of holding non-yielding bullion. This, in turn, weighs on the dollar, making gold more affordable for investors using other currencies.

“But while a rate cut tomorrow is near enough a certainty, what really matters for gold, and the dollar, is the longer-term forecast for where US rates are going,” said David Morrison, senior market analyst at Trade Nation. 

The dollar's value has recently dropped, reaching a 2.5-month low against the euro and a 10-month low against the Australian dollar, a currency often seen as an indicator of risk sentiment.

Oil rises 1%

The rise in oil prices was influenced by two main factors, the potential for supply disruptions from Russia, stemming from Ukrainian drone attacks on Russian ports and refineries, and the anticipation of an interest rate cut by the US central bank.

Ukraine's drone attacks on vital export ports and refineries have prompted Russia's oil pipeline monopoly, Transneft, to caution producers about potential output reductions, according to a Reuters report.

With peace talks at a standstill, Ukraine has escalated its assaults on Russia's energy infrastructure to weaken Moscow's ability to wage war.

Ukrainian attacks have, according to Goldman Sachs, eliminated roughly 300,000 barrels per day of Russia's refining capacity during August and thus far in September.

US Treasury Secretary Scott Bessent stated on Monday that the government would only consider imposing additional tariffs on Chinese goods, aimed at halting China's purchases of Russian oil, if European nations also levied duties on both China and India, the largest buyers of Russian crude.

“Despite sporadic fears that Ukraine and Russia could crimp supply as they attack each other’s energy infrastructure, the overall view is that supply is plentiful,” Morrison added. 

At the time of writing, the West Texas Intermediate crude oil was at $64 per ounce, up 1.1%, while Brent was at $67.96 a barrel, up 0.8%. 

Silver’s rally far from over

Silver prices on COMEX breached the $43 per ounce recently, a level not seen since 2011.

After Friday’s decline, the gold/silver ratio is hovering around 86, close to the year’s low recorded in early September.

Since the beginning of the year, silver has gained nearly 50%, outperforming even gold.

Silver is expected to follow gold’s recent upward trajectory and also experience a positive trend.

“This is probably also due to the fact that the already high gold price is deterring some investors, who are therefore looking for cheaper alternatives,” Carsten Fritsch, commodity analyst at Commerzbank AG, said in a report. 

Commerzbank now sees silver prices trading at $41 per ounce by the end of this year, and $43 an ounce by the end of 2026.