(MENAFN) Gold prices surged above the $4,200 per ounce mark on Wednesday, driven by mounting expectations of further US interest rate cuts and escalating worries over deteriorating US-China trade relations.

By 0737 GMT, gold had climbed 1.44% to $4,202 per ounce, marking a nearly 60% increase compared to the previous year. Silver also saw notable gains, rising 2.54% to $52.70 an ounce, following last week’s record peak above $53.20.

In the midst of ongoing debates over a potential federal government shutdown, Federal Reserve Chair Jerome Powell remarked on the state of the US economy, emphasizing that the labor market remains weak despite signs the overall economy "might be on a slightly stronger path than anticipated." He added that interest rate decisions would continue on a "meeting-by-meeting" basis, balancing persistent inflation above target levels with labor market challenges.

Market analysts widely expect the Fed to implement 25-basis-point rate cuts in both October and December.

Adding to the geopolitical strain, US President Donald Trump revealed that the US is considering cutting off some trade links with China, including those involving cooking oil. This development follows the recent imposition of reciprocal port fees by both countries, effective Tuesday.

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