KEY POINTS
- Gold hits a record high of $2,696.62 per ounce amid US election uncertainty and geopolitical tensions.
- Analysts predict gold could reach $2,941 per ounce within 12 months.
- Easing monetary policy and potential rate cuts from the Federal Reserve are keeping gold prices elevated.
As market apprehension over the impending US election and escalating Middle East tensions fueled a spike in demand for safe-haven assets, gold prices hit a record high on Thursday. Additionally, the relaxation of monetary policy has kept prices high.
Gold surges as demand rises
Spot gold prices increased by 0.5 percent to $2,686.52 per ounce at midday ET after reaching an all-time high of $2,696.62 per ounce. At the same time, the price of US gold futures was $2,704.80 an ounce.
Gold has risen more than 30 percent so far this year due to growing geopolitical uncertainties and predictions of future rate cuts from the Federal Reserve.
Investors have been gravitating toward gold due to worries about the US election and the Middle East, according to Nitesh Shah, a commodity strategist at WisdomTree.
“There is uncertainty as the US election draws near since it is still hotly contested. In these unstable times, gold frequently becomes the preferred asset, Shah said.
Future predictions and market sentiment
Attendees at the annual meeting of the London Bullion Market Association (LBMA) forecast that gold prices may rise to $2,941 an ounce in the upcoming year.
This prediction was emphasized by Ole Hansen, head of commodity strategy at Saxo Bank, who also mentioned that investors are taking notice of the possibility of additional gains.
“The LBMA poll suggested a significant rally towards $3,000, and with silver also expected to perform well, it’s capturing the market’s interest,” Hansen stated.
Despite the euphoria, Thursday’s gain cooled a little after news of a surprise decline in unemployment and better-than-expected US retail sales in September.
Expectations that the Federal Reserve may keep lowering interest rates were strengthened by these conflicting economic signs.
Impact of US monetary policy
Gold traders are setting up for future profits as a result of the Fed’s ongoing efforts to lower interest rates.
In his analysis of the Fed’s trajectory, senior market strategist Bob Haberkorn of RJO Futures said, “The recent economic data shows the Fed is likely to cut rates further, which could drive gold prices higher.”
According to Mining.com, Haberkorn believes that the prospect of another rate cut by the year’s end may increase demand for the precious metal even further.
All things considered, the mix of geopolitical worries, the uncertainty surrounding the US election, and a changing monetary environment is pushing gold higher. In the upcoming months, analysts anticipate that similar patterns will continue.
