Gold prices continued to rise and hovered at record levels due to increased demand for safe-havens.
Gold’s rally has gained momentum in the run-up to the US Presidential election, which will take place in November.
According to Fxstreet.com, former President Donald Trump is neck-and-neck with Vice President Kamala Harris in the opinion polls. A Trump victory would be a serious threat to geopolitical stability.
The 16th BRICS Summit is also taking place in Russia. Moscow is looking for an alternative to the US dollar’s dominance. Fxstreet reported that a currency backed up by gold was a viable alternative.
Geopolitical tensions fuel gold prices
The war between Israel and the Iran-backed Hezbollah continues in Gaza and Lebanon, despite efforts to stabilize the Middle East.
In a note, Joaquin Monfort of Fxstreet said that despite headlines declaring progress on his previous visit, the US Secretary of State Anthony Blinken appears no closer to securing ceasefire.
The COMEX gold price has risen by more than 30% in the first half of this year. Carsten Fritsch said that the current situation would represent the largest annual increase for 45 years.
Sky News reported that Blinken was forced to seek shelter in a bunker after the air raid sirens blared over Tel Aviv on Wednesday.
Gold price trend has been boosted by Trump’s trade rhetoric
Donald Trump’s likely victory in the US Presidential election has altered the US trade narrative.
Kelvin Wong is a senior analyst at OANDA.
The market may be spooked by Trump’s proposal to cut the corporate tax rate from 21% to 15%, which will increase the US federal debt. This could lead to a decline in the confidence of US Treasuries.
If Trump wins the election, he will likely impose additional tariffs against countries like China. This could ignite a new trade war between these two world leaders. Gold is a good safe-haven investment.
Wong said
Trump’s proposed trade and tax policies will likely reignite inflationary pressures on the medium- to long-term.
Gold is a popular metal.
Even with rising prices, gold investors’ sentiment remained positive.
Any price drop in gold is viewed by traders as an excellent opportunity to buy.
Fritsch, of Commerzbank, says that any decline in gold prices will be short-lived and small in scope.
A significant amount of money has been flowing into gold exchange-traded fund (ETFs).
Bloomberg reported that the inflows of gold ETFs for the past week totaled 13 million tons.
Commerzbank AG, however, believes that current gold price increases are exaggerated and a correction has been long overdue.
It is impossible to predict the exact moment and level at which a correction will begin. Fritsch stated that the magnitude of the correction would increase in proportion to the level of prices.
The December COMEX gold contract was trading at $2,759 an ounce when this article was written, which is largely unchanged compared to the previous close.
On Wednesday, the contract reached a record-high of $2.772.55 an ounce.
The Daily Hodl published the article Gold extends gains due to rising demand for safe-haven assets and uncertainty in advance of US elections.
