Gold hit a new high on Monday, extending its meteoric rise amid uncertainty over the U.S. election, tensions in the Middle East and interest rate cuts by major central banks, while silver reached its highest level in almost 12 years.
Spot gold was up 0.4% at $2,731.79 an ounce, by 0331 GMT, after hitting an all-time high of $2,732.73 earlier. U.S. gold futures were up 0.6% at $2,746.80.
Buoyed by bullion’s rally, spot silver rose 1.3% to $34.08 an ounce, its highest level since late 2012.
“The current market environment consists of interest rates moving south and increased geopolitical risks – a scenario that suits gold on both fronts,” said Tim Waterer, chief market analyst. at KCM Trade.
Investors also digested news that China cut its benchmark lending rates after cutting other key rates last month, as part of a stimulus package aimed at reviving the economy.
Gold demand in China, the largest consumer, has been hit by rising prices and the economic slowdown.
Elsewhere, traders believe there is a 99% chance the US Federal Reserve will cut interest rates in November. The European Central Bank cut interest rates by a quarter of a point last week.
Falling rates generally increase the appeal of gold, as bullion does not earn interest. Gold is also considered a safe investment during times of economic and political turmoil.
The 2024 U.S. presidential race between former President Donald Trump and Vice President Kamala Harris is neck and neck in the seven states that will decide the Nov. 5 election.
In the Middle East, hundreds of residents of Beirut fled their homes late Sunday after multiple explosions were heard, as Israel prepared to attack sites linked to the financial operations of the Hezbollah group.
For gold, “$2,800 appears to be a viable target for the end of the year… It will be tempting to lock in some profits, which could slow the immediate rise,” Mr. Waterer said.
However, he said he expected buyers to wait for better entry points in the event of a pullback.
Platinum rose 0.7% to $1,020.95 an ounce, its highest level since mid-July. Palladium gained 0.8% to $1,087.87.
