Gold closed at $2,721, setting a new record high, driven by escalating global uncertainties and expectations of monetary easing. The precious metal surpassed $2,700 for the first time as investors sought refuge amid geopolitical unrest and economic instability.
Key factors in the gold price surge include ongoing Middle East conflicts, particularly between Israel and Hezbollah. As Hezbollah intensifies its military involvement, regional instability deepens, prompting increased demand for gold as a safe-haven asset.
Anticipation of a U.S. Federal Reserve rate cut in November has also bolstered gold's appeal. Market expectations suggest a 92% chance of a 25 basis point rate cut, enhancing the allure of non-yielding assets like gold by lowering the opportunity cost of holding them.
The European Central Bank has cut rates for the third time this year and is expected to ease further, reinforcing gold's role as a hedge against uncertain economic conditions and supporting its bullish momentum.
Despite gold's upward trajectory, the U.S. economy presents mixed signals. Retail sales grew by 0.4% in September, surpassing expectations, while the housing market remains weak with declines in new home construction and building permits. This mixed economic data supports speculation that the Federal Reserve will maintain a dovish stance.
Investors remain cautious about the overall economic outlook, buoying gold alongside geopolitical risks and the upcoming U.S. presidential election, which adds to market uncertainty. Analysts predict further short-term increases in gold prices.
Gold is expected to continue its ascent after reaching new highs, supported by ongoing geopolitical tensions and monetary easing expectations. Although some profit-taking may occur in the short term, the overall demand outlook remains strong. Key factors to watch include developments in Middle East conflicts and U.S. economic data, both of which could further boost gold prices.
In the coming days, gold is expected to test resistance around $2,750. If safe-haven demand remains robust, prices could climb even higher.
