Gold $Gold - main 2412(GCmain)$ prices reached new heights on Thursday, driven by uncertainty surrounding the U.S. presidential election and escalating tensions in the Middle East, boosting demand for safe-haven assets.
Spot gold hit a record $2,696.62 per ounce, while futures on the New York Mercantile Exchange closed at $2,704.80 per ounce. The immediate catalyst for this surge was the Middle East unrest, prompting investors to flock to gold.
Market Caution Before the Election
FXTM Senior Research Analyst Lukman Otunuga notes that with less than three weeks until the U.S. election, the market may remain cautious. However, the uncertainty surrounding the election results has heightened demand for safe-haven assets like gold.
Investors see both presidential candidates as posing different economic risks. As they adjust their portfolios for potential market volatility, whether Trump or Harris wins, gold prices could continue to reach new highs.
Year-to-Date Gains and Central Bank Policies
Since the beginning of the year, gold prices have risen over 30%. This surge is fueled not only by safe-haven demand but also by the shift to accommodative monetary policies from central banks in Europe and the U.S. Lower interest rates enhance gold’s appeal as a non-yielding asset.
On October 17, the European Central Bank (ECB) unanimously cut its overnight deposit rate by 25 basis points to 3.25%, marking the third consecutive cut since June.
Future Price Predictions
Earlier this week, the London Bullion Market Association predicted that gold prices could climb to $2,941 per ounce over the next year.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, mentioned a survey indicating that gold might rebound to around $3,000 in the coming year, with silver potentially outperforming gold.
RJO Futures Senior Market Strategist Bob Haberkorn pointed out that if the Fed aims to lower rates further, a 25 basis point cut could happen by year-end, which would undoubtedly benefit gold prices.
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