Gold prices continued to rise for the second session in a row, today, Wednesday, amid a decline in stocks and US Treasury bond yields, and traders are awaiting more US economic data and estimates of a possible cut in interest rates. The uncertainty surrounding the US elections and geopolitical tensions also support the yellow metal.
Gold has witnessed a noticeable rise this year as one of the best performing commodities in 2024, supported by investors’ demand for it as a safe haven and increased purchases by central banks.
As the elections approach, investors are seeking to adjust their investment portfolios to face the uncertainty regarding the results of the US presidential race.
Gold rose in spot transactions on Wednesday by 0.7% to $2,678.70 per ounce, which is $7 less than a record peak of $2,685.42 recorded last month. US gold futures increased 0.6% to $2,695.30.
Yields on standard 10-year US Treasury bonds fell to the lowest level in more than a week, which increases the attractiveness of investing in gold.
The dollar witnessed a recovery after Republican candidate Donald Trump stated, in an interview with Bloomberg News, that he intends to significantly raise tariffs, reduce taxes, and seek direct consultation with the Federal Reserve (the US central bank).
Interest and elections
In financial markets, traders are focused on interest rate cuts and the health of the US economy. UBS analysts led by Mark Highfill said in a note, “We expect uncertainty and volatility to rise until the next US administration stabilizes.” They added, “Gold and oil can constitute an effective means of hedging in a volatile trading environment.”
Wall Street economists agree that Trump’s trade policies may support the dollar in the long term, as tariffs could reduce the flow of currency abroad and increase inflation and interest rates, and the continuation of the trade war may negatively affect global risk appetite, which enhances the attractiveness of the dollar. As a safe haven.
However, this scenario may create challenges for gold, according to Bloomberg, as gold tends to perform well in periods of inflation and geopolitical turmoil, but it is exposed to pressure in the event of a strong dollar and high interest rates. However, high Fed interest rates did little to impact gold’s meteoric rise to new highs last year.
Gold to record levels
Gold’s rise is expected to continue to record levels over the next year, according to a survey conducted by Bloomberg at the London Bullion Market Association conference in Miami.
Survey participants expect gold to rise to $2,917.4 per ounce by October next year, an increase of approximately 10% from current levels.
Gold prices have increased by about 30% since the beginning of the year, and other precious metals have also increased, led by silver, with an increase of 1.3%.
