Gold is soaring to record highs amid U.S. election uncertainty and expectations of rate cuts. Weak U.S. data could boost gold prices further, analyst says.Gold prices hit all-time highs on Thursday amid U.S. election uncertainty and expectations of further interest rate cuts by central banks. Investors’ attention shifted to U.S. data.
Spot gold prices were up 0.3% at $2,680.19 an ounce by 04:58 GMT after hitting a record high of $2,685.74 earlier in the session.
U.S. gold futures were up 0.2% at $2,695.90.
“Investors are looking to safe-haven gold as a hedge amid U.S. election uncertainty. “A Trump presidency could support gold as it could heighten trade tensions and widen the budget deficit,” said Kelvin Wong, senior market analyst for Asia Pacific at OANDA.
Republican presidential candidate Donald Trump defended his protectionist trade policies and other fiscal proposals on Tuesday.
U.S. retail sales for September and weekly jobless claims are due later on Thursday.
“Investors will be watching the data closely and if they come in below expectations, it could push gold prices higher. The prospect of lower rates globally is helping as it reduces the cost of storing bullion,” Wong added.
Traders are pricing in a 92% chance of the U.S. central bank cutting interest rates by 25 basis points next month.
The European Central Bank is likely to cut rates for the third time this year. While UK inflation slowed sharply last month, raising bets on a Bank of England rate cut next month.
Some analysts believe gold could face immediate resistance at $2,700, but prices are forecast to rise to $2,900 by next year.
Wall Street’s major indexes rebounded on Wednesday, with the Dow hitting its third record closing high in four days.
Lower interest rates and geopolitical tensions are boosting non-yielding bullion, which is seen as a safe haven asset.
Growing geopolitical risks amid heightened tensions in the Middle East have also boosted demand for safe haven assets, according to Daniel Hines, senior commodities strategist at ANZ.
Fears of a wider conflict have been heightened after Israel vowed to retaliate for an Iranian missile attack on October 1. Spot silver rose 0.6% to $31.50. Platinum rose 0.7% to $1,000.50 and palladium fell 0.6% to $1,017.26.
Ahead of Thursday’s U.S. data, gold hit a record high. Traders are also keeping a close eye on the escalating presidential race, which is driving demand for safe-haven assets.
The precious metal is up about 1% this week as investors reshuffle their portfolios ahead of the U.S. election in less than three weeks.
With both candidates posing different risks to the economy, gold is likely to get additional support whether Donald Trump or Kamala Harris wins.
Traders are now focusing on U.S. retail sales and unemployment data for more information on how the Federal Reserve will ease monetary policy this year. Initial jobless claims were likely to remain elevated in the week ended Oct. 12, while consumer spending likely rose modestly in September, according to Bloomberg Economics forecasts.
Cutting interest rates tend to be good for non-interest-bearing bullion.
The precious metal, which has gained 30% this year, is one of the best-performing plays in 2024.
Optimism about rate cuts has fueled recent gains since the Federal Reserve began its easing cycle last month. However, traders have scaled back expectations for the size and scope of rate cuts this year in recent weeks after mixed U.S. economic reports.
Heavy central bank purchases and rising geopolitical tensions have also supported gold.