On Wednesday, gold prices broke the mark of $2800 an ounce to set a new record as geopolitical tensions and uncertainty about US elections fueled demand for safe havens.
Haresh Menghani is the editor of Fxstreet.com. He said that the US Presidential election uncertainty was a major factor in favoring gold as a safe haven.
The most actively traded December contract for gold was trading at $2,799.70 an ounce as of the writing. This is up by 0.7% compared to the previous closing. The contract hit a new lifetime high at $2,801.65 an ounce during the previous session.
The yields on US Treasury bonds fell, further increasing demand for commodities that do not pay a return, such as silver and gold.
Gold prices are on the rise ahead of US Presidential Elections next week and an important Federal Reserve policy meeting.
The gold bulls are still resolute despite the expectation of a reduced wager on a bigger rate reduction by the Fed.
In September, the US central bank cut rates by 50 basis point. This fueled expectations that a similar reduction would be made in November.
Inflation in the US has been higher than expected and the labor market is resilient. This combination of factors, coupled with a hotter-than anticipated inflation rate, have reduced expectations for another similar cut.
CME FedWatch shows that traders are pricing in a 98% probability of the Fed reducing rates by 25 basis points at its meeting next week.
Uncertainty about US Elections
Gold demand has increased due to the uncertainty surrounding next week’s US election.
Analysts and polls predict that former president Donald Trump will face Vice President Kamala Harri in a fiercely contested race.
The US political situation has become more uncertain due to the fact that both candidates’ plans for the US economic future are different.
Investors are closely watching the outcome of next week’s elections, as they could have a major impact on US politics in the coming four years.
Tensions in geopolitical affairs are rising
A Tuesday Israeli attack on a Gaza residential building killed 100 people, according to reports.
Israel has carried out attacks on Iran’s facilities over the past weekend in response to Tel Aviv’s October 1 attack.
Iran has pledged to take retaliation against Israel, as the conflict continues to escalate in the Middle East.
Menghani is a note:
This development increases the likelihood of a new escalation in tensions within the Middle East, and also contributes to a bid-tone surrounding the safe haven XAU/USD. It offsets the recent rise in US Treasury Bond yields as well as the US Dollar.
Focus on economic data
Investors are focusing their attention on Thursday’s release of US GDP third-quarter data. On Thursday the unemployment claims report is also released, providing more clues to the economy of the US.
The US Personal Consumption Expenditure (PCE), which is a measure of personal spending, will also be published on Friday. This is the Fed’s preferred inflation gauge.
Payroll data for non-farming industries is due Friday.
The Fed could reduce rates at its next meeting if the economic data indicates that the US is resilient. Gold is likely to benefit from any reduction in rates, as gold is not a yielding asset.
Palladium prices hit 10-month high
Palladium prices continued their upward trend that began in the last week.
The price of gold had reached $1,255 an ounce, the highest in 10 months. In the three last trading sessions, prices have risen by 15%.
This optimism is sparked by US calls to G7 countries to look at ways to reduce Russia’s revenue by restricting its palladium imports.
Around 40% of palladium is produced in Russia.
Commerzbank AG stated in a recent report that “the price rise was probably exacerbated due to the cover of speculatively short positions.” The CFTC reported that net short positions were around 5,500 on the 22nd of October.
German Bank added
South Africa’s production will likely be curtailed due to the low prices of palladium and platinum. The fears that the shift to electric mobility would mean that palladium was not needed for car production in a few short years have been exaggerated.
The post Gold Price reaches New High, Exceeds $2800 Per Ounce; Palladium Continues its Ascent can be updated as new developments unfold.
This site is for entertainment only. Click here to read more
