Gold rises to another record high early Wednesday on geopolitical risk including the conflicts in the Middle East and the upcoming U.S. election. Spot gold hit a record high of $2,758.37 while U.S. gold futures edged 0.2% higher to $2,764.30. Since the high, the bullion has dropped on profit-taking with spot gold slipping $20 an ounce.
Haven demand flocked to the yellow metal and other assets considered safe as protection against risk. Prices were also elevated on anticipation of another Federal Reserve interest rate cut in November, a move seen as bullish for gold. The precious metal rose even as the dollar rose to a two-month high, something that would usually pressure gold.
Front-month gold futures rose 0.8% Tuesday to settle at $2,759.80 an ounce on Comex, and the most-active December contract increased 1.1% in the first two days of the week. Bullion is up 3.8% so far this month after gaining 5.2% in September and advancing 2.2% in August. The metal rose 13% in 2023. The December contract is currently down $7.60 (-0.28%) an ounce to $2752.20 and the DG spot price is $2738.60.
The U.S. presidential election is less than two weeks away, and millions of Americans are already casting early ballots. Vice President Kamala Harris and former President Donald Trump are locked in a near-dead heat, with the results in seven swing states likely to decide the election.
In the Middle East, U.S. Secretary of State Antony Blinken met with Israeli Prime Minister Benjamin Netanyahu Tuesday to discuss the conflict, though little progress was seen. Separately, Israel confirmed the death of a deputy Hezbollah leader.
Fed officials speaking this week were all in favor of additional interest rate cuts, but they differed on the pace of the reductions. The central bank cut interest rates by 50 basis points last month to 4.75% to 5.00%. It had kept them at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation.
Most investors tracked by the CME FedWatch Tool expect the Fed to cut rates again in November, with 87.5% anticipating a 25 basis point reduction. The rest are betting on the Fed holding rates steady. The central bank has two scheduled policy meetings left this year. Most investors tracked by the tool are expecting rates to end the year at 4.25% to 4.50%.
The International Monetary Fund forecast Tuesday that global output is expected to hold steady at 3.2% this year and next. But officials warned that the conflict in the Middle East and a shift toward trade wars, particularly by the U.S., could shift ethe forecast. IMF and World Bank finance ministers and central bank heads are meeting in Washington this week.
Front-month silver futures increased 2.8% Tuesday to $35.04 an ounce on Comex, and the December contract is up 5.4% this week. Silver is up 11% in October after rallying 7.9% in September and gaining 0.7% in August. It ticked up 0.2% in 2023. The December contract is currently down $0.821 (-2.34%) an ounce to $34.220 and the DG spot price is $34.08.
Spot palladium gained 2.4% Tuesday to $1,091.00 an ounce and is up 0.1% in the first two days of the week. Palladium is up 8% in October after gaining 3.2% in September and rising 3.2% in August. Palladium plummeted 38% last year. Currently, the DG spot price is down $14.40 an ounce to $1074.00.
Spot platinum advanced 2.6% Tuesday to $1,036.00 an ounce and is up 1.7% so far this week. Platinum is up 5.3% in October after increasing 5.6% last month and sliding 5.2% in August. Platinum dropped 6.8% in 2023. The DG spot price is currently down $8.60 an ounce to $1027.80.
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