Gold prices soar to record highs amid U.S. election and Middle East uncertainty

Gold prices surged to record highs on Thursday as global investors flocked to the safe-haven asset amid rising uncertainties surrounding the U.S. presidential election and the ongoing conflict in the Middle East.

The metal's appeal was further bolstered by expectations of continued monetary policy easing by central banks.

Spot gold climbed 0.7% to $2,690.60 per ounce by 1:42 p.m. ET (1742 GMT), while U.S. gold futures settled 0.6% higher at $2,707.50. This rise marks a notable increase of over 30% for gold in 2024, a year marked by heightened geopolitical tensions and economic instability.

Gold's rally has been fueled by a combination of geopolitical uncertainties and monetary policy shifts, with the U.S. Federal Reserve cutting interest rates by half a percentage point last month.

The possibility of further rate cuts continues to support gold’s rise, as the precious metal thrives in low-interest environments, which reduce the opportunity cost of holding non-yielding assets.

Experts predict that gold prices could continue to climb, with the London Bullion Market Association's (LBMA) latest forecast predicting prices could reach $2,941 per troy ounce within the next 12 months.

Ole Hansen, head of commodity strategy at Saxo Bank, echoed this outlook, noting that the potential for gold to reach $3,000 next year, drawing increased attention from investors.

"With the looming uncertainty of the U.S. election and the ongoing conflict in the Middle East, gold is being increasingly viewed as a safe harbor," said Nitesh Shah, a commodity strategist at WisdomTree. "Investors often turn to gold in times of uncertainty, and that trend is only strengthening."

While gold prices touched new highs, they briefly retreated earlier in the day after U.S. retail sales data showed a slight uptick for September, and the Labor Department reported an unexpected drop in unemployment. These indicators suggest some resilience in the U.S. economy, potentially tempering expectations for aggressive monetary policy easing.

Despite these mixed signals, analysts remain bullish on gold, pointing to the continued accommodative stance of central banks around the world. The European Central Bank, for instance, cut interest rates for the third time this year by a quarter point, further supporting the environment for gold’s rise.

In other precious metals, spot silver dipped 0.3% to $31.56 per ounce, while platinum edged up 0.1% to $994.00 per ounce. Palladium, meanwhile, saw a more significant gain of 1.7%, reaching $1,041 per ounce.

As the global economy grapples with ongoing challenges, gold's upward trajectory appears set to continue, with investors keenly watching both geopolitical developments and central bank actions in the coming months.