HONG KONG – Gold prices hit a record high above US$2,700 on Oct 18 as escalating Middle East conflicts saw investors flock to safety, even as mixed data on the US economy dashed hopes for large rate cuts by the Federal Reserve in 2024.
Bullion hit an all-time high of US$2,704.89 in early Asian trade, up from its previous record of US$2,688.83 reached on Oct 17, as markets reacted to Israel’s killing of Hamas leader Yahya Sinwar – the architect of the Oct 7, 2023, attack that triggered the year-long war in Gaza.
Prime Minister Benjamin Netanyahu said Israel would keep fighting until all the hostages seized by Hamas in 2023 are free, even as US President Joe Biden said it was time for the war to end.
Investors typically seek safety in gold in times of geopolitical and economic uncertainty.
Haven demand outweighed macro headwinds that would normally weigh on the precious metal, after US reports on Oct 17 diminished bets on the scale of Fed easing. US retail sales strengthened in September by more than forecast and jobless claims unexpectedly fell in a separate print, reinforcing the view that the US economy is nowhere near a recession. Higher interest-rate environments typically pressure non-interest-bearing gold.
Gold was about 1.5 per cent higher for the week, as investors repositioned portfolios ahead of the US election on Nov 5. With both candidates posing different risks to the economy, gold is likely to see further support – no matter whether Donald Trump or Vice-President Kamala Harris wins.
Bullion – up about 30 per cent in 2024 – is one of the year’s strongest-performing commodities. Rate-cut optimism fuelled the most recent gains as the Fed kicked off its easing cycle in September. Strong central bank purchases have also supported gold.
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