Gold breaks above US$2,700 for first time as Mid-East tensions spark safe haven demand
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Gold – a safe haven in times of geopolitical and economic uncertainty – is up more than 30 per cent in 2024.
PHOTO: REUTERS
HONG KONG – Gold breached the US$2,700-per-ounce level on Oct 18 for the first time ever, as US election jitters and simmering Middle East tensions boosted demand, while a looser monetary policy environment also added fuel to the rally.
Spot gold firmed 0.6 per cent to US$2,709.28 per ounce as at 4.30am GMT (12.30pm Singapore time) and gained 2 per cent this week. US gold futures rose 0.6 per cent to US$2,724.50.
Bullion – a safe haven in times of geopolitical and economic uncertainty – is up more than 30 per cent in 2024. Rate-cut optimism fuelled the most recent gains as the Fed kicked off its easing cycle in September. Strong central bank purchases have also supported gold.
Gold could gather further traction, given the fluidity of election developments and geopolitical uncertainties, said OCBC Bank forex strategist Christopher Wong.
Militant group Hezbollah said it will escalate its war with Israel after the killing of Hamas leader Yahya Sinwar.
Elsewhere, with less than three weeks remaining to cast votes in the US presidential election, Democratic Vice-President Kamala Harris and Republican former president Donald Trump are stretching for the support of every last voter.
US economic data released overnight pointed to a strengthening economy, which boosted the US dollar. But traders still see a 90 per cent chance of a Federal Reserve rate cut in November. The European Central Bank cut interest rates for the third time in 2024 as the euro zone economy sags.
Lower rates increase the non-interest-bearing gold’s appeal.
Bullion will continue to perform well over the long term, benefiting from the precarious fiscal situations of many Western nations, and the global desire for a store of value independent of other assets and institutions, said Mr Ryan McIntyre, senior portfolio manager at Sprott Asset Management.
Delegates to the London Bullion Market Association’s annual gathering predicted gold would rise to US$2,941 over the next 12 months and silver to US$45. REUTERS
