Gold is glittering to its brightest, with prices surging to an all-time high of $2,708 in early morning trading hours on Friday, as expectations of further rate cuts by the US Federal Reserve and uncertainties over the impending US election, boosted demand for bullion.
Apprehensions over further escalation in the ongoing regional conflict in the Middle East and the European Central Bank’s (ECB) move to further slash interest rates are adding to the investor frenzy to bet on further price surge in the yellow metal, considered as a safe haven investment, market experts said.
Friday morning trading hours saw spot prices firming up by 0.57 per cent – or $15.44 – from the previous day’s close.
The current rally in prices comes close on the heels of gold emerging as the standout asset in Q3, 2024, appreciating by a whopping 13.8 per cent, as per a report by CoinGecko.
Currency and digital market experts said the yellow metal prices are likely to see more new highs in the coming days and weeks.
“Undoubtedly, investor sentiment toward gold is seeing a more positive twist this year as central bank monetary policies and regional conflict forced the embrace of safe assets,” Maruf Yusupov, co-founder of Deenar, a gold-backed stablecoin platform, told Arabian Business.
“Gold has been a standout performer over the past quarter after hitting multiple all-time highs atop a 13.8 per cent surge,” he said.
Yusupov said considering the commodity’s market cap, this growth rate is impressive, especially as it stayed relatively stable compared to Bitcoin, which recorded just 24 per cent over the past quarter.
Gold emerging as an attractive allocation for investors
Market experts and participants said growing concerns on further economic volatility in view of further interest rate cuts by the US and other central banks, as also the November 5 US election, still considered a razor-thin margin call between Kamala Harris and Donald Trump, are making gold an attractive allocation for investors.
The ongoing geopolitical tensions in the Middle East also continue to support the upward momentum in the yellow metal’s prices, they said.
“With the US election less than three weeks away, market caution is likely to remain a key theme.
“Given the tight race between Donald Trump and Kamala Harris, this adds another layer of uncertainty – stimulating demand for safe haven assets,” Yusupov said.
Vijay Valecha, Chief Investment Officer at Dubai-based Century Financial, said rate cut optimism and central bank purchases are driving the current rally in gold prices.
“Additionally, gold-backed ETFs are on track for a fifth monthly expansion in October, marking the longest stretch of inflows since 2020,” Valecha said.
He said it surpassed last month’s peak to cross the $2,700 mark currently, ahead of closely watched economic reports like industrial production, retail sales and jobless figures.
Gold beats Bitcoin, firms up by as much as 30% this year
Market experts said prices have registered a record-breaking rally in 2024, adding over 30 per cent so far this year.
This rally is being driven by growing uncertainty in the returns of risky assets, including stocks and bonds, they said.
Yusupov said investor sentiment has shifted recently as many gained access to gold, proof that many are running from more volatile assets like Bitcoin.
“With the 50-basis points rate cut from the US Federal Reserve and further cuts by 25 basis points projected for November, more economic uncertainty lies ahead,” he said.
Over the past few years, many have compared gold and Bitcoin as possible safe haven assets.
The Deenar Co-founder, however, said despite different valuations and performance per market data, both assets – gold and bitcoin – still have dedicated proponents.
Valecha said the US Dollar Index has strengthened in recent days, propelled by resilient economic reports and improving odds of a Trump victory.
“However, this hasn’t deterred gold from scaling to new heights as investors adjust their portfolios in anticipation of the upcoming US election,” he said.
“Given the distinct economic risks associated with each candidate, gold could potentially remain supported regardless of the outcome,” Valecha said.
Market experts said the core triggers of the current macroeconomic uncertainties are not uniform.
While others slashed rates, the Bank of Japan hiked interest rates, which has weighed positively on the yen, they pointed out.
Yusupov said despite these discrepancies, investors across the globe have trust in gold to better preserve their capital.
“The primary goal in these times of uncertainty is not to increase profit but to guarantee asset safety.
“However, gold has been able to offer a mix of both, making it a relatively superior asset compared,” he said.
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