LONDON — Gold prices experienced a modest uptick on Thursday, driven by safe-haven demand that counterbalanced a strengthening U.S. dollar. Analysts are optimistic about the potential for record-high bullion prices in the near future. Meanwhile, palladium reached its highest value in over a month.
Gold Prices Climb Amid Geopolitical Tensions
Spot gold rose by 0.2% to $2,723.10 per ounce by 0400 GMT, following a record high of $2,758.37 achieved on Wednesday. The surge in demand has been attributed to rising anxieties surrounding the upcoming U.S. elections and ongoing tensions in the Middle East. U.S. gold futures also reflected this trend, increasing by 0.3% to $2,736.10.
Despite these gains, the U.S. dollar remained near a three-month peak, which limited gold’s potential for a more substantial rally. A stronger dollar makes gold more expensive for holders of other currencies, which can dampen demand.
Political Uncertainty Fuels Demand
As the November 5 presidential elections approach, the race between U.S. Vice President Kamala Harris and Republican candidate Donald Trump has intensified. The political uncertainty has contributed to heightened demand for gold as a safe-haven asset.
In parallel, recent Israeli airstrikes on Damascus and military targets near Homs have further exacerbated geopolitical tensions, contributing to increased interest in gold investments.
Analysts Predict Record Highs
Looking ahead, analysts foresee significant upward movement in gold prices. Sugandha Sachdeva, founder of New Delhi-based SS WealthStreet, expressed optimism, stating, “For the rest of 2024, we see potential highs of $2,800, with targets around $3,000 or higher in 2025.” Factors such as ongoing geopolitical risks, a potential easing cycle from the U.S. Federal Reserve, and increased central bank purchases are expected to drive this growth.
U.S. Economic Stability and Rate Cuts
Despite the geopolitical climate, U.S. economic activity has remained steady from September into early October, with a slight uptick in hiring. This stability suggests that the Federal Reserve may implement a 25-basis-point rate cut soon. Lower interest rates diminish the opportunity cost of holding non-yielding assets like gold, which often boosts demand.
Silver Prices Show Promise
Alongside gold, silver prices have also been on the rise. Spot silver increased by 0.5% to $33.89 per ounce, reflecting positive market sentiment. Analysts predict that silver will continue to rise, bolstered by lower borrowing costs and stimulus measures in China. Sachdeva anticipates that silver could climb to around $45 per ounce by 2025.
Palladium Sees Significant Gains
Palladium also experienced a notable surge, jumping 5.1% to $1,111.50, marking its highest level since September 18. The increase in palladium prices comes as the U.S. government urged Group of Seven allies to consider imposing sanctions on Russian palladium and titanium, following concerns over Russia’s geopolitical actions. Notably, Russia’s Nornickel is the largest producer of palladium globally.
Conclusion
As gold prices rise in response to safe-haven demand amid geopolitical uncertainties, analysts remain optimistic about the potential for record highs in both gold and silver markets. With the U.S. elections just around the corner and global tensions continuing to influence market dynamics, investors are closely monitoring developments that could shape future price movements in precious metals. The outlook for palladium also appears promising, reflecting broader trends in the metals market influenced by geopolitical factors and supply concerns.
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