Gold Nears Record as Mideast, US Election Drive Haven Demand

Gold rose — approaching Monday’s record high — with haven demand driving bullish sentiment as traders monitored geopolitical risks including conflict in the Middle East and the US election that’s less than two weeks away.

Seek Safety

Bullion climbed as much as 0.6% to trade near $2,735 an ounce, shrugging off higher Treasury yields as investors focused on increasing tensions between Israel and Iran. Traders were also repositioning portfolios ahead of the US election on Nov. 5. Investors typically seek safety in gold in times of geopolitical and economic uncertainty.

ETF

The precious metal has surged by almost a third this year, hitting successive all-time highs, with the rally intensifying in the last couple of months as the Fed pivoted to cutting interest rates. Money managers have also added to the strength of the rally, with hedge funds increasing net-long positions in gold in recent sessions, while investors have been adding to exchange-traded fund holdings.

Labor Market

Citigroup Inc. analysts led by Max Layton boosted the bank’s three-month forecast by 3.7% to $2,800 an ounce amid expectations that further labor market deterioration will drive demand for gold, according to a note. 

Spot gold rose 0.5% to $2,733.41 an ounce as of 1:26 p.m. in Singapore after touching a record of $2,740.59 on Monday. The Bloomberg Dollar Spot Index eased after rising 0.4% in the previous session. Silver rose to trade close to a 12-year high. Palladium and platinum both climbed.

About E. J. McKay

E.J.McKay is a Shanghai-headquartered investment bank with a special focus on mergers & acquisitions. We are one of the most long standing independent investment banks in China, with core business of mergers & acquisitions and financing advisory.