Global uncertainties drive gold above unprecedented USD 2,700/oz milestone

Gold surged above the historic threshold of USD 2,700-per-ounce on Friday, powered by escalating tensions in the Middle East, uncertainties around the US elections and relaxed monetary policy expectations that pushed the metal into uncharted territory.

Spot gold was up 1% at USD 2,720.05 per ounce by 02:58 p.m. ET (1858 GMT) and has risen 2.4% so far this week.

US gold futures settled 0.8% higher to USD 2,730.

“With the conflict intensifying – particularly following Hezbollah’s announcement to escalate the war with Israel – investors are flocking to gold, a traditional safe-haven asset,” said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany.

Pledges from Israel and its enemies Hamas and Hezbollah to keep fighting in Gaza and Lebanon dashed hopes that the death of a Palestinian militant leader might hasten an end to the escalating war in the Middle East.

Rising geopolitical tensions prompt investors to seek safe-haven assets like gold, driven by risk aversion and concerns over global market instability.

“Adding to the momentum, concerns around the US presidential election and anticipation of looser monetary policies have further fueled the rally,” Zumpfe added.

Gold shattered records multiple times this year as expectations of more rate cuts by central banks and geopolitical uncertainties boosted prices by more than 30% so far this year, its best annual growth since 1979, as per LSEG data.

Lower rates enhance the appeal of bullion, which yields no interest on its own.

Sources told Reuters the ECB was likely to cut again in December unless economic data suggests otherwise. Traders are also pricing in a 92% chance of a Federal Reserve rate cut in November, according to the CME Fedwatch tool.

Max Layton, global head of commodities research at Citi, sees gold prices reaching USD 3,000/oz over the next 6-12 months, as a store of wealth in a time of high US and European economic uncertainty, driving up ETF and investment demand.

Silver is expected to perform strongly to USD 35/oz over the next three months, Layton added.

Spot silver rose 6% to USD 33.58. Platinum added 2.4% to USD 1,016.25 and palladium gained about 4% to USD 1,083.25.

(Reporting by Anushree Mukherjee, Swati Verma, and Anjana Anil in Bengaluru; Editing by Shailesh Kuber and Shreya Biswas)