5 min readGold is rising for a fourth straight day, confidently pushing above $2700 and reaching a record high of $2715 per oz. The precious metal is one of the strongest-performing commodities this year, with gains of over 30% in 2024, boosted by a combination of factors, including easing central bank policies, an uncertain US election outlook, and tensions in the Middle East.
Central banks cut rates
Global central banks have started to ease their monetary policies by lowering interest rates. Yesterday, the ECB cut interest rates by 25 basis points, marking its third rate cut this year. The Federal Reserve cut interest rates by a bumper 50 basis points in September and is expected to reduce rates again in November and possibly December. Gold doesn’t pay a dividend or return a yield. Therefore, it performs better in lower interest rate environments, as the opportunity cost of holding gold is lower.
Geopolitical tensions
Traders are also seeking safety in gold amid escalating tensions in the Middle East after news that Israel killed Hamas leader Yahya Sinwar. Israel’s Prime Minister Benjamin Netanyahu has said that Israel will keep fighting even though U.S. President Joe Biden said it’s time for the water to end.
US election uncertainty
Uncertainty surrounding the upcoming US election could continue to support gold. The election campaign is heading into its final weeks, with voters heading to the polls on November 5th. Republican candidate Donald Trump and Democratic candidate Kamala Harris have diverging views on capital markets regulation, taxes, government spending, and broader fiscal policy. With less than three weeks to go, the national polls show that Harris has a very slight lead of 2.4% over Trump. However, the Polymarket poll points to Trump being in the lead. Either way the race is still too close to call.
Uncertainty heading into the US election is supporting gold. However, the precious metal is likely to perform well regardless of the election outcome amid expectations that central banks will continue cutting interest rates, adding Gold to their reserve holdings, and geopolitical tensions will persist.
Fed speakers are in focus
Looking ahead, attention today will be on Federal Reserve speakers, including Atlanta Fed President Raphael Bostic, Fed Governor Christopher Waller, and Philadelphia Fed President Neel Kashkari. Investors will be looking for clues about the future path for interest rates. Should Fed speakers start to sound more cautious about cutting interest rates, gains in the precious metal could be limited.
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