Gold prices have surpassed $2,700 an ounce for the first time, driven by rising concerns over conflicts in the Middle East and an uncertain US election landscape, prompting investors to seek safe-haven assets. The precious metal surged by as much as 0.7%, reaching $2,711.99 an ounce, exceeding the previous session’s all-time high. Market attention is fixated on escalating geopolitical tensions following Israel’s announcement of the death of Hamas leader Yahya Sinwar, a key figure behind the attacks on southern Israel that sparked a prolonged conflict in Gaza.
Israeli Prime Minister Benjamin Netanyahu reiterated that the military campaign would continue until all hostages taken by Hamas last year are liberated. This stance comes despite US President Joe Biden’s call for an end to the hostilities. In periods of geopolitical and economic instability, gold typically attracts investors seeking security.
In addition, market participants are adjusting their portfolios in anticipation of the upcoming US elections on November 5. “There is a significant divergence between traditional polls and decentralized betting polls as the election date approaches,” stated Christopher Wong, an FX strategist at Oversea-Chinese Banking Corp. “Given the evolving political landscape and geopolitical uncertainties, hedging strategies involving Trump—such as long positions in gold—may gain traction.”
In related market movements, the Bloomberg Dollar Spot Index experienced a slight decline of 0.1%, breaking a four-day upward trend. A weaker dollar renders gold more affordable for international buyers, as it is traded in US currency. Wong commented, “The dollar rally seems to be reaching a technical peak, making a near-term pullback plausible.”
This week, gold has gained about 2%, as safe-haven demand has overshadowed macroeconomic challenges that typically pressure the metal following reports that diminished expectations for significant Federal Reserve easing.
Recent data revealed stronger-than-expected retail sales in September and an unexpected decline in jobless claims, reinforcing the belief that the economy is not on the brink of recession. Typically, higher interest rates exert downward pressure on non-yielding gold.
So far in 2024, bullion has emerged as one of the best-performing commodities, boasting over 30% gains, spurred by optimism around potential interest rate cuts as the Federal Reserve began its easing cycle last month. Additionally, robust central bank purchases have consistently supported gold prices.
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