Gold prices hit a record high in Asian trade on Wednesday as safe haven demand was boosted by increased political uncertainty in the U.S. and Japan, as well as anticipation of more cues on interest rates.
The yellow metal had a slow start to the week as a less severe than feared attack by Israel on Iran pushed up some hopes of easing tensions in the Middle East.
But safe haven demand remained underpinned by anticipation of a tight 2024 presidential election, with voting set for November 5. Japan also added to the political uncertainty after a coalition led by the ruling Liberal Democratic Party lost its parliamentary majority in a recent election.
Spot gold rose 0.3% to a record high of $2,779.81 an ounce, while gold futures expiring in December rose 0.3% to $2,791.90 an ounce.
Election uncertainty mounts, gold demand upbeat
Markets were largely on edge before the presidential election in November, with Donald Trump and Kamala Harris locked in a tight race.
Recent polls and prediction markets showed Trump gaining a slight edge, although analysts still saw the race as too close to call.
Trump and Harris have proposed wildly differing plans for the U.S. economy, sparking further uncertainty over policy in the coming years.
Political uncertainty in Japan also presented an added layer to safe haven demand, after the LDP’s election loss presented a fractured outlook for the country.
The LDP will now have to seek alliances with smaller, regional parties to maintain power, potentially diluting its governance.
Beyond elections, tensions in the Middle East also still remained in play, given that Iran still vowed retaliation for Israel’s recent strike.
Israel also kept up its bombing and attacks on Hamas and Hezbollah, presenting limited scope for a de escalation in the conflict.
Rate uncertainty high as econ. data, Fed meeting looms
Markets were also on edge before a barrage of cues on the U.S. economy and interest rates in the coming days.
Third-quarter gross domestic product data is due on Thursday, while PCE price index data- the Federal Reserve’s preferred inflation gauge- and nonfarm payrolls are due on Friday.
The readings come just days before a Fed meeting, where the central bank is widely expected to cut interest rates by a smaller 25 basis points. But the prospect of lower U.S. interest rates still bodes well for non-yielding assets such as gold.
Other precious metals were also boosted by safe haven demand. Platinum futures rose 0.2% to $1,061.60 an ounce, while silver futures rose 0.4% to $34.570 an ounce.
Among industrial metals, benchmark copper futures on the London Metal Exchange were flat at $9,560.50 a ton, and were nursing steep losses for October.
