Gold prices surged, nearing a record high, driven by heightened demand for safe-haven assets amid escalating geopolitical risks and the upcoming US presidential election. Investors are seeking shelter in gold as global uncertainty grows, with the precious metal climbing 0.6% to trade close to $2,735 per ounce.
The rising tensions between Israel and Iran have intensified concerns in the Middle East, prompting traders to increase their gold holdings. Additionally, with the US election just two weeks away, market participants are repositioning portfolios in anticipation of potential economic disruptions. Historically, gold has been a go-to asset for investors during times of political and economic instability.
Despite rising Treasury yields, gold’s upward momentum continued as market sentiment remained focused on geopolitical factors. Investors were also evaluating differing perspectives from US Federal Reserve officials regarding the direction of interest rates. Kansas City Fed President Jeffrey Schmid voiced support for a slower reduction in rates, while San Francisco Fed President Mary Daly called for additional cuts to protect the labor market.
Gold has experienced a nearly 30% increase this year, reaching successive all-time highs. The rally has gained further traction in recent months as the Federal Reserve shifted towards rate cuts. Hedge funds have contributed to the surge, with many increasing net-long positions in gold, while investors are adding to exchange-traded fund (ETF) holdings.
Analysts at Citigroup, led by Max Layton, have raised their three-month gold price forecast by 3.7% to $2,800 per ounce. They predict that further labor market deterioration will continue to bolster gold demand.
As of 1:26 p.m. in Singapore, spot gold rose by 0.5% to $2,733.41 per ounce, approaching the record high of $2,740.59 set on Monday. The Bloomberg Dollar Spot Index, which had risen 0.4% in the previous session, eased slightly, while silver also saw gains.
