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Highlights
- Gold reaches an all-time high amid rising global tensions.
- Precious metals, including silver, experience upward momentum.
- The US bond market's selloff contributes to gold's demand.
Gold surged to a record high as global market uncertainty continues to push traders toward safe-haven assets. With rising geopolitical risks, especially surrounding the conflict in the Middle East and the upcoming US elections, traders have driven gold prices to new peaks. On Wednesday, gold climbed to $2,750.34 per ounce, surpassing the previous day's peak. The ongoing concerns about potential escalation between Israel and Iran have heightened demand for precious metals, and this has benefited gold, which is often viewed as a safer asset during times of turmoil.
This rise in gold prices has also impacted other metals, with silver coming close to reaching $35 per ounce, a level not seen since 2012. The rally in both metals indicates broader interest in precious metals, as traders seek shelter from volatile markets and mounting global tensions. The conflict in the Middle East has significantly contributed to this, along with a tight US presidential race, making the future of the global economy uncertain.
Despite a recent selloff in US government bonds, which would typically weigh on gold due to higher yields, demand for the metal has remained strong. Higher yields generally put pressure on gold prices since the metal doesn’t offer interest or dividends. However, this time, traders are focused on safe-haven assets like gold, which provides security in uncertain times. The bond selloff was largely driven by expectations of a slower pace of rate cuts from the US Federal Reserve.
Gold's steady rise this year reflects its resilience against these macroeconomic factors. As the Federal Reserve signaled a shift toward rate cuts, the precious metal gained even more traction. Money managers and hedge funds have also contributed to the rally, increasing net-long positions in gold futures. Additionally, exchange-traded funds (ETFs) have seen increased inflows, further boosting gold's momentum.
In a note from Standard Chartered Plc, analyst Suki Cooper emphasized that gold's current rise could continue, especially as traders anticipate further global uncertainties. The bank predicts that gold may average around $2,800 per ounce in the final quarter of the year, with expectations of $2,900 per ounce in early 2025.
As gold continues to reach new highs, the ongoing global issues are likely to keep the demand for this precious metal strong. The sustained bullish sentiment across the precious metals market highlights gold's enduring appeal as a refuge during volatile times.
