Gold prices climbed to a record high on Thursday before retreating while investors awaited U.S. inflation data for insight into the Federal Reserve‘s monetary policy trajectory. Gold is gearing up for its best month since March on rising safe-haven demand ahead of the November 5 U.S. presidential election which coincides with ongoing geopolitical tensions in the Middle East.
In the UAE, gold rates gained AED0.5 with 24-carat gold rising to AED337.25 and 22-carat gold inching up to AED312.25. In addition, 21-carat reached AED302.25 and 18-carat gold hit AED259.
Globally, spot gold declined 0.14 percent to $2,784.42 per ounce, after hitting a record high of $2,790.15 earlier in the session, while December gold futures fell 0.17 percent to $2,796.10 per ounce. Gold prices have gained close to 5 percent so far this month and almost 41 percent in the past year.
U.S. election enters final stage
The U.S. election has entered a critical final stage, with opinion polls signaling a very tight race between Republican former U.S. President Donald Trump and Democratic Vice President Kamala Harris, further fueling the surge in gold prices. According to RealClear Polling, Trump is currently leading Harris in the presidential race, with the averages of Trump and Harris at 48.4 and 48 percent, respectively.
Despite polls suggesting that Trump holds a slight lead, analysts believe the outcome remains too close to call a clear winner. The starkly contrasting economic plans proposed by Trump and Harris have added further uncertainty regarding future U.S. policies.
Amid political and economic uncertainty in the U.S. and the Middle East, investors see gold as a safe haven investment that thrives in a low interest rate environment which further supports the metal’s prices.
Fed’s potential rate cut nears
As gold prices scale a new high, investors are awaiting the release of U.S. core personal consumption expenditures (PCE) data due at 12:30 GMT today. The market expects the September core PCE price index to have increased 0.3 percent after August’s 0.1 percent gain.
If the Federal Reserve’s preferred inflation measure signals a decline in price pressures, the possibility of a rate cut rises, further supporting gold prices’ upward movement as the yellow metal’s demand continues to rise. U.S. weekly jobless claims data due later in the day and payrolls report on Friday are also on the market’s radar. Third-quarter gross domestic product (GDP) data is also expected today.
Currently, traders are pricing a 96.1 percent chance that the Fed will deliver a 25-basis-point reduction in short-term borrowing costs next week.
The Automatic Data Processing (ADP) reported on Wednesday that private sector employers added 233,000 new jobs in October compared to the previous month’s upwardly revised reading of 159,000 and better-than-expected consensus estimates. This data points to a resilient labor market, which, along with a series of upbeat U.S. data released recently, suggested that the economy remains strong and supports prospects for a less aggressive easing by the Federal Reserve.
“Even amid hurricane recovery, job growth was strong in October. As we round out the year, hiring in the U.S. is proving to be robust and broadly resilient,” stated Nela Richardson, chief economist, ADP.
In addition, the U.S. Bureau of Economic Analysis’ initial estimate suggested that the world’s largest economy grew by a 2.8 percent annualized pace during the third quarter, slower than the 3 percent growth recorded during the April-June period.
Read: Five UAE stocks that have gained the most since January 1
Other precious metals
As gold prices retreated from their all-time high, the precious metals market slipped with spot silver declining 0.71 percent to $33.56 per ounce and platinum falling 0.60 percent to $1,002.43. Palladium also tumbled, losing 1.27 percent to $1,132.71 after hitting a 10-month high last week. All three metals were on track for monthly gains.
Contrary to market trends, copper rose 0.16 percent to $4.33. Manufacturing activity in the biggest gold consumer China expanded in October for the first time in six months, supporting policymakers’ optimism that recent fresh stimulus will get the economy back on track. Copper prices had previously retreated as investors awaited more economic cues from China, the world’s biggest importer of the red metal. Copper witnessed steep losses throughout October as recent stimulus measures from Beijing failed to boost confidence in an economic recovery.
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