Gold broke new records on Wednesday as the Nigerian government went hard on illegal mining of the precious metal at Nigeria’s Federal Capital
The yellow metal reached a record high as demand for the precious metal continues to rise despite economic uncertainty worldwide. Spot gold (XAU/USD) reached its highest point during exceeding the previous high of $3,500 for April, at $3,535 per ounce before stabilizing near $3,530 in London, where it remained higher for the day.
FG shut down an illegal gold mining site in Abuja
The Nigerian government shut down an illegal gold mining site in Gwagwalada, Federal Capital Territory, to address the environmental risks and insecurity caused by unregulated mining. His Special Assistant on Media, Segun Tomori, said the action was taken following a directive from Dr. Dele Alake, Minister of Solid Minerals Development.
“The crackdown followed a similar operation on August 16, when Mining Marshals sealed another illegal site in the district 2 Extension Layout of Gwagwalada and arrested sixteen suspects who are currently facing prosecution,” he stated.
According to initial investigations, artisanal miners swarmed the area after a gold vein was unintentionally discovered while excavating a soak-away pit near a residential property, he added. In response to this new information, Dr. Dot Alake ordered the Mining Marshals to be dispatched to the scene. Bandits and illegal miners sell their gold to merchants and traders. These traders, mostly business elites from other regions in Nigeria, sell the yellow metal in Agadez, Niger, Libya, and Algeria, or in the Diffa region of Chad. Benin also receives gold from certain traders.
Gold takes the haven badge amid high buying interest
Gold futures for December delivery rose to $3,600. Bullion has doubled since early 2023, with prices up more than 35% year-to-date, solidifying its position as the best-performing safe-haven asset on the market.
The belief that the Federal Reserve plans to cut interest rates for the first time in nine months is what is driving the rally. A 90 percent chance of a 25-basis-point cut on September 17 is priced
into the markets. The bullion asset increased earlier this year after US President Donald Trump announced broad tariffs that disrupted international trade.
The bullion asset has been boosted by expectations that the US central bank will lower its key interest rate, as gold is seen as a safer asset for investors during uncertain economic times.
There is also growing concern about the independence of the US central bank with Donald Trump’s repeated attacks on Fed chair Jerome Powell and his actions which fire Fed governor Lisa Cook .The precious metal is also lifted by the selling pressure on the US currency as markets saw a 90 percent chance of a quarter-point reduction in interest rates at the Federal Reserve’s September meeting.
In addition, Christine Lagarde, the head of the European Central Bank, cautioned that Trump’s actions would pose a “very serious danger” to the world economy if he were to weaken the Fed’s independence. She claimed that if the Fed were compelled to react to Trump’s political views, it would have a “very worrying” effect on the global economy and on US economic stability
A combination of macroeconomic and geopolitical risks is reflected in the sharp increase in gold prices. President Trump’s increasing tariffs and rhetoric against trading partners have rekindled tensions in the global trade arena while the dollar index hovers around one-month lows
The pressure on the greenback causes foreign buyers to find gold more affordable, which fuels the momentum.
The crisis in the global debt market boosted interest in gold. Bond markets in Europe follow this pattern, with the UK. French 30-year yields are at a 16-year high, German 30-year bonds are at their highest price since 2011, and 30-year gilt yields are at a 27-year high.
Precious metals are becoming defensive hedges as investors run from sovereign debt. Additional urgency for diversification into bullion is layered by geopolitical backdrops, such as Russia’s war in Ukraine and the ongoing unrest in the Middle East.
