Gold Touches Record High On Robust Demand Amid US Election Uncertainty, Middle East Conflict
Gold prices went up on Friday, crossing $2,700 per ounce for the first time. This rise happened because more people are buying gold as a safe investment due to worries about the upcoming US elections and the conflict in the Middle East.
Gold Prices Surge
On Friday morning, spot gold rose 0.6% to $2,707.33 per ounce, after starting the day at $2,694.20.
Gold contracts for December 2024 delivery also climbed 0.6%, reaching $2,723.90 per ounce. This is the first time gold prices have crossed the $2,700 mark.
A more relaxed monetary policy has helped boost the gold market, according to a Reuters report.
Experts believe prices may rise even more due to uncertainty around the US elections and rising tensions in the Middle East. OCBC FX strategist Christopher Wong said these events could impact gold’s value.
In the Middle East, the Iran-backed Hezbollah group has threatened to respond to Israel for the assassination of Hamas leader Yahya Sinwar, raising the risk of further conflict.
Meanwhile, with the US elections on November 5 fast approaching, Vice President Kamala Harris and Republican nominee Donald Trump are working hard to gain voter support.
“Gold is ignoring the strength of the dollar and keeps rising whenever it can. This is a strong bull market with no signs of slowing down,” said Tai Wong, an independent metals trader in New York.
US Economy Grows Stronger
New data released on Thursday shows that the US economy is improving, helping the US dollar gain strength.
The average weekly earnings for full-time workers in the US increased by 4.2% compared to last year, reaching $1,165 in the third quarter of 2024, according to the US Bureau of Labor Statistics.
The same bureau also reported that consumer prices, measured by the Consumer Price Index (CPI), rose by 2.6% between July and September.
Despite these positive signs, most investors believe there is a 90% chance the US Federal Reserve will reduce interest rates during its upcoming meeting on November 6-7.
Meanwhile, the European Central Bank cut interest rates for the third time this year to support its slowing economy. Lower interest rates tend to make gold more attractive to investors since it doesn’t provide interest or income like other assets.
Ryan McIntyre, a senior portfolio manager at Sprott Asset Management, told Reuters that gold will likely keep performing well, especially given the uncertainty in Western economies and the growing desire for assets that aren’t tied to banks or other institutions.
Published: 19th October 2024
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