Gold prices soared to an all-time high on Wednesday, driven by heightened safe-haven demand amid rising political uncertainty in both the U.S. and Japan, alongside expectations for more indications regarding interest rates.
In the UAE, gold rates surged AED3 with 24-carat gold rising to AED336.50 and 22-carat gold inching up to AED311.75. In addition, 21-carat reached AED301.75 and 18-carat gold hit AED258.50.
Spot gold climbed 0.3 percent to a record high of $2,779.81 per ounce, while December gold futures also rose 0.3 percent, reaching $2,791.90 per ounce.
“Today, gold is up 0.37 percent as investors flocked towards the safe haven metal as the US elections are set to take place in exactly a week. According to RealClear Polling, Trump is currently leading Harris in the presidential race, with the averages of Trump and Harris at 48.6 and 47.6, respectively,” said Vijay Valecha, chief investment officer, Century Financial.
“Furthermore, this week also beholds the Indian festival Diwali. The festival is set to be celebrated from October 31 to November 1. Historically, in the past 10 years, the metal has generally declined by about 0.94 percent two days before the festival,” he added.
The yellow metal experienced a sluggish start to the week, bolstered by some optimism surrounding a potential easing of tensions in the Middle East. However, safe-haven demand remained robust due to concerns over a tight presidential race in the U.S., with voting scheduled for November 5. In Japan, political uncertainty was amplified following a recent election in which a coalition led by the ruling Liberal Democratic Party (LDP) lost its parliamentary majority.
Election uncertainty fuels gold demand
As the presidential election approaches in November, markets are increasingly on edge, with Donald Trump and Kamala Harris engaged in a closely contested race. Recent polling and prediction markets suggest Trump holds a slight lead, though analysts believe the outcome remains too close to call. The starkly contrasting economic plans proposed by Trump and Harris have added further uncertainty regarding future U.S. policies.
In Japan, the LDP’s electoral defeat has contributed to a fragmented political landscape, necessitating the formation of alliances with smaller regional parties, which could weaken its governance.
Markets are also bracing for a series of economic indicators in the coming days. Third-quarter gross domestic product (GDP) data is expected on Thursday, followed by the Personal Consumption Expenditures (PCE) price index— the Federal Reserve’s preferred inflation measure— and nonfarm payroll data on Friday. These releases precede a Fed meeting where a modest interest rate cut of 25 basis points is widely anticipated. Lower U.S. interest rates are generally favorable for non-yielding assets like gold.
Precious metals show strong demand
Other precious metals also benefited from safe-haven demand, with platinum futures rising 0.2 percent to $1,061.60 per ounce and silver futures increasing 0.4 percent to $34.57 per ounce. In contrast, benchmark copper futures on the London Metal Exchange remained unchanged at $9,560.50 per ton, having faced significant losses throughout October.
Read more: UAE, global gold prices edge down on stronger dollar
Ongoing gold market trends
On Tuesday, gold prices edged closer to their record high amid uncertainty surrounding the upcoming U.S. presidential election and anticipation of key economic data that could provide insight into the Federal Reserve’s interest rate direction.
In the UAE, gold prices increased by AED3, with 24-carat gold rising to AED333.50 and 22-carat gold reaching AED308.75. Additionally, 21-carat gold hit AED299 and 18-carat gold climbed to AED256.25.
Globally, spot gold saw a 0.25 percent increase to $2,749.72 as of 5:09 GMT after reaching a peak of $2,758.37 last week. Meanwhile, U.S. gold futures rose 0.25 percent to $2,762.70.
Gold prices have maintained their upward momentum even as recent data suggests that the Fed may adopt a more cautious approach to rate cuts in the near future. Markets now assign a 94.9 percent probability to a 25 basis points rate cut by the Fed, according to CME’s FedWatch tool. Lower interest rates diminish the opportunity cost of holding gold, which is often viewed as a safe asset during periods of economic and political instability.
Market recovery for precious metals
As gold prices rebounded, the precious metals sector regained its footing, with spot silver climbing 0.29 percent to $33.79 per ounce and platinum increasing by 1.05 percent to $1,043.85. Palladium also rose 0.54 percent to $1,225.16 after reaching a 10-month high last week. Conversely, copper prices fell 0.16 percent to $4.33, as investors awaited additional economic signals from China, the largest importer of copper. October has seen significant losses for copper, as recent stimulus measures from Beijing failed to instill confidence in an economic recovery. Attention now turns to the upcoming purchasing managers’ index data from China, scheduled for release on Thursday, which will provide further insights into the country’s economic status.
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