Pullback in US yields spurs gold’s march toward record peak

Gold advanced towards record highs on Wednesday as gains in non-yielding bullion were bolstered by weakness in US bond yields and expected rate cuts by major central banks, with additional safe-haven support from ongoing geopolitical conflicts.

Spot gold rose 0.5% to USD 2,673.24 per ounce by 5:30 p.m. ET (2130 GMT), inching close to a record high of USD 2,685.42 it hit on Sept. 26. US gold futures settled 0.5% higher at USD 2,691.3.

“Expectations of a 25-basis-point rate cut by the US Federal Reserve in November are solidifying, weaker inflation data in Europe and the UK have increased expectations for more aggressive ECB and BoE easing, leading to generally lower yields which have lifted gold,” said Peter A. Grant, vice president and senior metals strategist at Zaner Metals.

“There’s even an outside chance we could see close to USD 3,000, and that’s probably more of a Q1 2025 target,” Grant said.

US Treasury yields fell to their lowest in over a week, making gold more attractive as it tends to thrive in a low interest rate environment.

Traders currently see about a 94% chance of a 25-basis-point US rate cut in November, according to the CME FedWatch tool.

The European Central Bank looks set to deliver another rate cut on Thursday, while a drop in British inflation indicated a rate cut next month by the Bank of England.

The main bullish drivers for gold include the risk of fiscal instability, safe-haven appeal, geopolitical tensions, de-dollarization, US Presidential election uncertainties, and rate cuts by central banks, said Ole Hansen, head of commodity strategy at Saxo Bank.

Delegates to the London Bullion Market Association’s annual gathering predicted gold prices would rise to USD 2,941 over the next 12 months and silver prices would jump to USD 45 per ounce.

Spot silver firmed about 0.6% to USD 31.67. Platinum rose 1% to USD 994.43 and palladium climbed 1.5% to USD 1,024.76.

(Reporting by Anushree Mukherjee in Bengaluru, additional reporting by Swati Verma; Editing by Krishna Chandra Eluri and Tasim Zahid)