(Bloomberg) — Gold is hovering near record highs as the looming U.S. election and conflict in the Middle East increase demand for havens.
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Gold bullion was trading near $2,735 an ounce, just shy of Monday’s all-time high. Traders are flooding into markets amid a close U.S. presidential election and persistent concerns that violence in the Middle East could escalate into wider war.
Strong central bank buying and expectations for interest rate cuts in the US are also supporting gold’s strong performance this year. Fed officials continue to voice their views on future policy, with Jeffrey Schmidt favoring a slower pace of rate cuts and Mary Daley predicting further rate cuts.
“Gold has been one of the best-performing commodities this year, rising more than 30% so far on the back of interest rate cut optimism, strong central bank buying and solid Asian buying,” ING Bank NV said in a note. ” he said. “Demand amid heightened geopolitical risks and uncertainty ahead of the US presidential election in November are also supporting gold’s record rally.”
Asset managers increased net long positions in gold, and investors increased their holdings in exchange-traded funds (ETFs). Analysts at Citigroup raised their three-month price forecast 3.7% to $2,800 an ounce as they believe further deterioration in the labor market will boost demand.
Although the outcome of the US election remains uncertain, Ole Hansen, head of product strategy at Saxo Bank A/S, suggests that gold and silver are caught up in betting on a Republican victory.
See also: What Harris-Trump’s election means for the markets: QuickTake
As of 1:25 p.m. in London, spot gold was up 0.6% at $2,736.82 an ounce. The Bloomberg Dollar Spot Index was little changed. Palladium, platinum and silver all rose.
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