Gold prices rose on Tuesday and hovered near the record high of $2,740.37 they recorded on Monday amid uncertainties surrounding the U.S. election, ongoing Middle East tensions, and interest rate cut expectations by major banks.
In the UAE, gold rates fell AED0.5 with 24-carat gold declining to AED331 and 22-carat gold reaching AED306.50. In addition, 21-carat gold lost AED0.25 to AED296.75 and 18-carat gold reached AED254.50.
Globally, spot gold rose 0.46 percent to $2,733.95 as of 5:10 GMT after hitting a record $2,740.37 in the previous session. Meanwhile, U.S. gold futures increased 0.34 percent to $2,748.30. So far this year, gold has gained around 32 percent.
U.S. election spurs safe-haven demand
Several factors have supported gold prices recently including the upcoming U.S. Presidential election which will keep raising political uncertainty as it nears. Therefore, investors expect gold prices to exceed the $2,800 level in the short term. With elections only a few weeks away, competition is rising between former President Donald Trump and Vice President Kamala Harris to win over some of the swing states.
Recent polls pointed to a close race between the two candidates in the upcoming presidential election on November 5. Uncertainty over the outcome and the sharp contrast between the stances of both candidates raised uncertainty among traders who largely turned to risk aversion in recent sessions, favoring safe haven assets. This risk aversion is expected to increase as the elections draw closer.
Middle East geopolitical risks
Among the other factors supporting gold prices are the ongoing geopolitical tensions in the Middle East with slim prospects of the war ending any time soon. The risk of a wider regional conflict also remains, further supporting safe-haven demand amid political and security uncertainty.
Safe haven demand also helped precious metal prices overcome the recent strength in the U.S. dollar, which rose to a near three-month high this week. The greenback was supported by increased bets on a slower pace of rate cuts by the Federal Reserve which traditionally impacts the metals markets.
Interest rate cuts
As central bank demand for gold remains robust, traders are closely watching monetary policy developments, with many anticipating a shift from the Federal Reserve. According to the CME Fedwatch tool, there is currently an 87.7 percent probability that the Federal Reserve will implement a 25-basis-point interest rate cut in November. This expectation has added a layer of complexity to the market dynamics, influencing investor sentiment and trading strategies.
Interestingly, despite the strength of the U.S. dollar and rising bond yields, both of which typically weigh on gold prices, the yellow metal has experienced a rally. Gold prices have managed to push higher even as benchmark 10-year U.S. Treasury yields climbed to a 12-week high in the most recent trading session.
At the same time, the U.S. dollar has remained near its strongest levels in two-and-a-half months, further adding to the tension between gold’s traditional safe-haven appeal and broader market forces.
Read: Global gold prices hit new record high of $2,732.76 ahead of U.S. election, UAE rates up
Other precious metals
As gold prices hovered near their record high, the precious metals market saw positive movement with spot silver rising 1.07 percent to $34.12 per ounce and platinum gaining 0.57 percent to $1,009.03. Palladium also rose 1.39 percent to $1,065.71.
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