Gold prices are on the rise and continue climbing towards unprecedented peaks.
On Monday, October 21, the spot gold rallied for a fifth straight day, hitting an all-time high of $2,736.86 earlier in the session. Meanwhile, US gold futures were 0.7% higher at $2,750.00 and the price of spot silver hit a near 12-year peak, rising to $34.02 per ounce, its highest since late 2012.
On Tuesday, the gold futures marked $2,747.90 and spot gold stood at $2,734.41, as of 9:36 GST. Silver futures reached $34.38 at the same time.
The gold rush was driven by economic uncertainty, lowering interest rates, a contested US presidential election and geopolitical tensions in the Middle East.
“The uncertainty of the US presidential election outcome is one factor supporting hedging demand for gold, the other probably are the geopolitical tensions in the Middle East,” UBS analyst Giovanni Staunovo said. “Ongoing solid demand from central bank also supports gold, in my view. We look for gold to reach to $2,900/oz over the next 12 months, supported by further rate cuts by the Fed.”
The yellow commodity remains one of the most successful commodities this year, boasting over a 32% increase in 2024 alone.
In September 2024, gold achieved its third consecutive month of gains, according to the latest report by the World Gold Council. At the time, the yellow metal posted a 4.6% increase, finishing the month at $2,630 per ounce. The continuation of the upward trend experienced in July and August pushed gold to achieve new highs on eight separate occasions throughout September.
“Gold is one of the strongest performing commodities in 2024,” said Vijay Valecha, Chief Investment Officer, Century Financial. “While Chinese investors have stepped back from gold due to the People’s Bank of China’s stimulus measures aimed at supporting equity markets, western investor activity has picked up.
“Offshore gold ETFs saw inflows of $1.8 billion last week, and foreign gold mining ETFs attracted $208 million, a notable reversal from earlier outflows this year. Moreover, investors are pricing in a 90% probability of a rate cut in November, further supporting gold’s rally.”
As a popular safe-haven asset, gold’s attractiveness as an investment increases during times of macroeconomic shifts, economic uncertainty and geopolitical tensions. The most significant influence came from the US Federal Reserve’s decision to cut interest rates by 50 basis points in September, an unexpectedly large reduction that triggered widespread movement across financial markets.
A weaker US dollar, resulting from the Fed’s decision, amplified the attractiveness of gold as a store of value. In addition, ongoing geopolitical tensions created further demand for gold as investors sought safer assets amid rising uncertainty. These factors, combined, are pushing the commodity to continued all-time highs.
