Gold prices (Spot Gold: XAUUSD) reached an all-time high on Wednesday, driven by heightened demand for safe-haven assets amid growing political uncertainties in the United States and Japan.
Initially, gold saw a subdued start to the week as a less intense-than-anticipated Israeli attack on Iran suggested a possible easing in Middle Eastern tensions.
However, the upcoming 2024 U.S. presidential election on November 5 has kept the demand for safe-haven investments strong. The political uncertainty in Japan also rose after a coalition led by the ruling Liberal Democratic Party lost its majority in a recent election, further fueling the demand for safe-haven assets.
Spot gold increased by 0.4% to $2,785.47 per ounce, hitting a record high of $2,790.01 earlier in the day, while December gold futures rose 0.6% to $2,796.85 per ounce.
With the U.S. presidential election drawing near, markets remained tense as Donald Trump and Kamala Harris continued in a close race. Recent polls showed Trump gaining a slight edge, though analysts considered the outcome too close to predict.
In Japan, the LDP’s recent election loss introduced further uncertainty, as it must seek alliances with regional parties to govern effectively, potentially weakening its influence. In the Middle East, tensions persisted, with Iran vowing to retaliate for recent Israeli strikes and Israel maintaining military actions against Hamas and Hezbollah, suggesting limited room for de-escalation.
Economic and interest rate data, such as the U.S. third-quarter GDP data, the Federal Reserve’s preferred inflation gauge, and nonfarm payrolls, are playing a significant role in shaping investor sentiment. These releases precede a Federal Reserve meeting, where a modest rate cut of 25 basis points is anticipated. Lower U.S. interest rates are typically favourable for non-yielding assets like gold.
Safe-haven demand also supported other precious metals, with platinum futures down 3.7% to $1,020.20 per ounce and silver futures falling 1.5% to $33.94 per ounce. In industrial metals, London Metal Exchange copper futures rose by 0.1% to $9,564.00 per ton but faced significant losses for October.
