Safe-haven surge, Fed rate-cut bets drive gold to new record highs

• HSBC lifts 2025 gold forecast to $3,355/oz
• U.S. shutdown halts data; Treasury warns $15 bln weekly hit
• Traders see 25 bps Fed cuts in Oct and Dec

By Sherin Elizabeth Varghese

Oct 16 (Reuters) - Gold hit a record high for the fourth straight session on Thursday, as investors flocked to the safe-haven metal on brewing U.S.-China trade tensions and the U.S. government shutdown, with bets on interest rate cuts fueling the momentum.

Spot gold XAU= was up 0.8% at $4,242.65 per ounce, as of 09:10 a.m. ET (1310 GMT) after bullion touched a record high of $4,254.61 earlier.

U.S. gold futures GCcv1 for December delivery were up 1.3% at $4,256.70.

The yellow metal has gained over 60% year-to-date, driven by geopolitical tensions, aggressive rate-cut bets, central bank buying, de-dollarisation and robust ETF inflows.

"Gold's trajectory will hinge on the rate-cut picture heading into 2026 as well as the developments around U.S.-China. If no deal is reached between the U.S.-China and the relationship continues to deteriorate, that could be the spark gold needs to cross the $5000/oz barrier," said Zain Vawda, analyst at MarketPulse by OANDA.

Investors this week have stayed focused on the simmering U.S.-China trade spat, with Washington on Wednesday criticizing China's expanded rare earth export controls as a threat to global supply chains.

Traders are pricing in a 25 basis-point U.S. Federal Reserve rate cut in October, and another in December, with probabilities of 98% and 95%, respectively. FEDWATCH

Non-yielding gold typically performs well in a low-interest-rate environment.

Short-term pullbacks in gold are likely to be temporary, as bullish investors tend to use dips to re-enter positions, Vawda said.

HSBC raised its 2025 average gold price forecast to $3,355 an ounce on Wednesday, citing safe-haven demand from geopolitical tensions, economic uncertainty and a weaker U.S. dollar.

Meanwhile, the ongoing U.S. government shutdown has halted scheduled economic data, with a Treasury official warning it could cost the economy up to $15 billion a week in lost output.

Spot silver XAG= fell 0.2% to $52.96 per ounce, after hitting a record high of $53.60 on Tuesday, tracking gold's rally and supported by tightness in the spot market.

Platinum XPT= rose 0.7% to $1,665.24 and palladium XPD= climbed 1.8% to $1,564.00.