Gold prices soared to a record high in Asian trade on Friday, driven by safe haven demand as the U.S. presidential election draws near. The European Central Bank’s interest rate cut also contributed to the precious metal’s rally.
Gold rose 0.4% to a record high of $2,705.26 an ounce, while futures expiring in December climbed 0.5% to $2,720.15 an ounce. Despite strong U.S. retail sales and labor market data, which suggested a slower pace of interest rate cuts by the Federal Reserve, gold continued to strengthen.
Gold Buoyed by Pre-Election Safe Haven Demand
Bullion prices broke out of a tight trading range in anticipation of the upcoming U.S. election. With Vice President Kamala Harris and former president Donald Trump in a close race, uncertainty surrounding the election outcome led to increased demand for safe haven assets like gold.
Gold Prices Brush Off Stronger Dollar
Despite pressure from a stronger dollar, gold remained resilient as the greenback hit a 2-½ month high. The Federal Reserve’s expected smaller interest rate cuts were offset by a 25 basis point cut by the ECB, signaling a global trend towards easing monetary policy. This environment is likely to support gold and other non-yielding assets.
Overall, gold prices are on the rise due to safe haven demand ahead of the U.S. election and global central banks’ commitment to further rate cuts. Investors are turning to gold as a reliable asset in times of uncertainty and market volatility.