Gold reached an all-time high of $2,696.78 as tensions in the Middle East intensified following Israel’s announcement that it had killed Hamas leader Yahya Sinwar. This event, coupled with the broader conflict in Gaza, has driven investors toward the security of precious metals. The ongoing conflict has kept markets on edge, with expectations of further retaliation from Israel and its potential impact on global stability.
In addition to geopolitical factors, recent US economic data has played a crucial role in shaping gold prices. US retail sales in September exceeded forecasts, and jobless claims fell unexpectedly, adding to a series of mixed economic readings. These developments have reinforced the belief among gold traders that the Federal Reserve will continue its path of interest-rate cuts, with another quarter-point reduction anticipated before the end of the year.
The relationship between gold prices and interest rates is well-established: lower rates make non-interest-bearing assets like gold more attractive. As the US election approaches, with Vice President Kamala Harris and former President Donald Trump neck-and-neck in the polls, the economic policies of both candidates add another layer of uncertainty, driving further investment in gold. Regardless of the election outcome, gold is expected to remain strong due to its status as a hedge against economic instability.
In the North American session on Thursday, gold prices hit a record high, trading at $2,691. Despite strong US retail sales and labor market data, the precious metal remained resilient. The US Dollar Index, tracking the greenback against a basket of currencies, reached a two-month peak, further influencing gold’s performance. Traders adjusted their expectations for the Federal Reserve’s actions, with a slight decrease in the odds of a 25 basis points rate cut in the upcoming meetings.
As geopolitical tensions and economic uncertainties continue to shape the global landscape, gold remains a critical asset for investors seeking stability. The interplay between Middle Eastern conflicts, US economic data, and the impending presidential election underscores the ongoing volatility in the markets. With gold hitting new highs and central bank policies in flux, the precious metal is poised to remain a key player in the investment world.
