Gold prices surged to a record high during Asian trading on Wednesday, driven by fears of a tight U.S. presidential race and ongoing tensions in the Middle East that increased demand for safe-haven assets.
The rise in gold occurred despite the dollar hitting a near three-month high, as traders anticipated the Federal Reserve would slow its pace of interest rate cuts. Other precious metals also enjoyed strong gains recently.
Spot gold rose slightly to a record $2,750.35 per ounce, while December gold futures increased by 0.2% to $2,764.15 per ounce. The primary driver of these price gains was heightened demand for safety as traders prepared for a potentially contentious presidential election.
Recent polls and online prediction markets indicated that Republican nominee Donald Trump might have an edge over Democrat Kamala Harris. However, analysts consider the race too close to call with about two weeks until the election.
Safe-haven demand was further bolstered by persistent tensions in the Middle East. Israel continued its military actions against Hamas and Hezbollah, while U.S. diplomats attempted to negotiate a ceasefire with no immediate signs of de-escalation. Reports also indicated that Israel was preparing a retaliatory strike against Iran.
Despite a stronger dollar and rising Treasury yields, safe-haven demand allowed gold prices to remain resilient. Recent signs of stability in the U.S. economy led to expectations that the Fed might cut rates by 25 basis points in November, a smaller reduction than the 50 basis points cut anticipated in September. Traders are also adjusting their expectations for a higher terminal rate.
Other precious metals exhibited mixed performance on Wednesday. Silver futures fell by 0.5% to $34.885 per ounce, while platinum futures rose by 0.5% to $1,046.10 per ounce.
In the industrial metals market, copper prices declined as attention turned to potential stimulus measures in China, the top importer. The upcoming meeting of the National People’s Congress is expected to provide more insights on fiscal spending.
Benchmark copper futures on the London Metal Exchange dropped by 0.4% to $9,587.50 per ton, with December copper futures also falling by 0.4% to $4.3718 per pound. Copper has faced steep losses over the past two weeks as recent stimulus measures from China fell short of expectations, lacking clarity on their scale and timing.
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