Gold hits record US$2,698.50 amid Middle East tensions
Gold prices surged to a new record high as heightened Middle East tensions drove investors towards the safe-haven asset, despite mixed economic data from the United States tempering expectations for significant interest rate cuts by the Federal Reserve this year.
Bullion increased by 0.2% to US$2,698.50, surpassing the previous all-time high set yesterday by approximately one dollar. This rise came in response to Israel’s assassination of Hamas leader Yahya Sinwar, the orchestrator of the October 7 attack that has ignited ongoing conflict in Gaza.
Prime Minister Benjamin Netanyahu confirmed Israel’s commitment to continue its military operations until all hostages taken by Hamas last year are released. Meanwhile, US President Joe Biden called for an end to the war. In periods of geopolitical and economic instability, investors often turn to gold for security.
The demand for gold as a haven asset overshadowed unfavourable macroeconomic conditions that would typically depress its value. US economic reports yesterday, October 17, indicated stronger-than-expected retail sales in September and a surprising drop in jobless claims, suggesting the economy is far from a recession. Generally, higher interest rates exert downward pressure on non-yielding assets like gold.
For the week, gold was up by about 1.5% as investors adjusted their portfolios in anticipation of the US election on November 5. Both presidential candidates present distinct economic risks, likely bolstering gold regardless of whether Donald Trump or Vice President Kamala Harris emerges victorious.
Gold has appreciated by roughly 30% this year, making it one of 2024’s top-performing commodities. The recent gains have been driven by optimism about rate cuts, as the Federal Reserve commenced its easing cycle last month. Additionally, substantial central bank purchases have provided further support, reported Bangkok Post.
At 8.15am in Singapore (7.15am in Thailand) today, spot gold traded at US$2,697.43 per ounce. The Bloomberg Dollar Spot Index declined by 0.1%, following four consecutive days of gains. Prices for silver and palladium rose, while platinum remained stable.
