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The rally comes despite rising bond yields and a stronger US dollar, which usually would have weighed on the precious metal. This brings bullion’s year-to-date gain to approximately 34%, making it one of the best-performing assets of 2024.
“Market positioning is elevated ahead of the election but also in anticipation of further Fed rate cuts and broader market and geopolitical uncertainty,” Standard Chartered Plc analyst Suki Cooper said in a note quoted by Bloomberg.
“Under a Trump-win scenario, markets are focused on the implications of wider tariffs, as well as inflationary pressures as a result of such tariffs.”
“Gold trades up on the week, despite deflating risk premiums elsewhere, confirming the focus remains the US election and especially the prospect of a Trump 2.0,” Saxo Bank said in a note to Bloomberg.
“It may bring greater policy disruption, trade tariffs and increased geopolitical risks.”
Global gold demand swelled about 5% in the third quarter, setting a record for the period and lifting consumption above $100 billion for the first time, according to the World Gold Council. The increase — which saw volumes climb to 1,313 tons — was underpinned by stronger investment flows from the West, including more high-net-worth individuals.
Gold’s rally also follows new economic data released Tuesday that showed US job openings fell far more than expected while consumer confidence rose above all estimates. Investors now await more data later this week to further gauge the Federal Reserve’s stance on interest rates.
Markets are currently pricing in an almost 100% chance for a 25-basis-point rate cut by the US central bank in November.
“Gold should retain its upward bias and may even flirt with $2,800 in the days ahead, as long as US election risks continue weighing on market sentiment, while Fed rate cut expectations remain intact,” said Han Tan, chief market analyst at Exinity Group, on Tuesday.
(With files from Bloomberg and Reuters)
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