Gold prices rose to a new record high on Monday amid growing uncertainty surrounding the upcoming U.S. presidential election, escalating tensions in the Middle East, and rate cuts by major central banks, contributing to a significant increase in bullion prices as investors seek safe-haven assets.
Fluctuations in the financial markets impact investment choices. Therefore, investors seek safe-haven assets like gold during volatile periods.
In the UAE, gold rates gained AED1 with 24-carat gold rising to AED330.50 and 22-carat gold reaching AED306. In addition, 21-carat gold was priced at AED296.25 and 18-carat gold at AED254.
Globally, spot gold rose 0.32 percent to $2,730.64 as of 4:49 GMT after hitting a record $2,732.76 earlier in the session. Meanwhile, U.S. gold futures increased 0.57 percent to $2,745.50.
Global uncertainties propel bullion
Gold prices hit a new high as the global market witnessed declines in interest rates and growing geopolitical risk. In China, investors are gauging the impact of the latest lending rate cut following reductions to other policy rates last month as part of a package of stimulus measures to revive the economy. Gold demand in China, the world’s largest consumer, has taken a hit amid high prices and an economic slowdown.
Central bank purchases are also increasing demand for gold, as central banks are actively buying gold to diversify their reserves amid declining interest rates and global uncertainties.
In the U.S., traders are pricing in a 92.6 percent chance of a Federal Reserve interest rate cut in November, according to the CME FedWatch tool. The US central bank’s monetary policy decisions, particularly anticipated rate cuts, can significantly influence gold prices and market sentiments. Meanwhile, the European Central Bank cut interest rates by a quarter point last week.
Lower interest rates traditionally enhance non-yielding assets’ appeal including gold. Moreover, investors see gold as a safe investment during times of economic and political turmoil.
U.S. elections
The 2024 U.S. presidential elections are nearing as the race between former President Donald Trump and Vice President Kamala Harris remains neck and neck in seven states that will decide the November 5 election. The rise in gold price, against the backdrop of political uncertainty and economic factors, is a key indicator of the market’s reaction to these political events.
Analysts noted that, with all the factors playing into the surge in prices, gold is set to rise to the $2,800 level this year.
Read: Gold prices set new record high at $2,713.76 as safe-haven demand surges, UAE rates up
Other precious metals
As gold prices set a new record high, the precious metals market saw positive movement with spot silver rising 1.09 percent to $34.02 per ounce and platinum gaining 0.37 percent to $1,017.24. Palladium also rose 0.63 percent to $1,086.35.
Further supported by bullion’s rally, spot silver rose 1.3 percent earlier in the session to $34.08 per ounce, its highest since late 2012.
For more news on markets, click here.
