MUMBAI: Gold continued its rally for the fifth consecutive day on Monday, hitting a record high driven by uncertainties surrounding the US presidential election, ongoing tensions in the Middle East, and expectations of further central bank interest rate cuts.
Silver also surged to a near 12-year peak.
Spot gold gained 0.5 per cent to $2,733.50 (approximately Rs2,27,780) per ounce as of 0910 GMT, after reaching an all-time high of $2,733.82 earlier in the day.
Gold futures
The US gold futures were up 0.7 per cent at $2,748.20.
“The uncertainty over the outcome of the US presidential election is one factor supporting hedging demand for gold, and geopolitical tensions in the Middle East are likely another,” said UBS analyst Giovanni Staunovo.
The presidential race between former President Donald Trump and Vice President Kamala Harris remains tight, especially in the seven battleground states crucial to deciding the November 5 election.
Middle East troubles
Meanwhile, in the Middle East, hundreds of Beirut residents fled their homes as Israel prepared to target sites linked to Hezbollah’s financial operations.
Gold, which is often viewed as a safe-haven asset during political and geopolitical instability, has risen 32 per cent this year.
“Ongoing solid demand from central banks also supports gold, in my view. We expect gold to reach $2,900 (Rs2,41,800) per ounce over the next 12 months, further buoyed by anticipated rate cuts from the Federal Reserve,” Staunovo added.
Federal rates
Traders are currently pricing in a 90 per cent chance of the US Federal Reserve lowering interest rates in November, according to the CME FedWatch tool.
Gold typically performs well in a low interest rate environment.
Sources have told Reuters that the European Central Bank is likely to cut rates again in December, while British inflation slowed sharply last month, strengthening expectations of a Bank of England rate cut in November.
Benefiting from gold’s rally, spot silver rose 1.2 per cent to $34.06 (Rs2,83,310) per ounce, its highest since late 2012. Kinesis Money noted that silver’s upward momentum is likely to continue if gold sets new highs, but any decline could see the $32.55 level turn into new support.
Platinum increased by 0.5 per cent to $1,018.90 (Rs84,750) per ounce, its highest since mid-July, while palladium dropped 0.3 per cent to $1,075.87 (Rs89,450).
