Gold prices continued to rise, buoyed by declining equities and weaker bond yields. The precious metal’s steady climb is being closely watched by investors, as it nears record highs set just a month ago. Spot gold advanced 0.7% to $2,678.70 per ounce, coming within $7 of the recent peak of $2,685.42. U.S. gold futures similarly increased by 0.6%, trading at $2,695.30 per ounce.
This uptick in gold prices comes amid broader market turbulence, as traders anticipate key U.S. economic data that may influence the Federal Reserve’s timeline for interest rate reductions. Giovanni Staunovo, an analyst at UBS, remarked that the gold market appears poised for further gains, driven by a risk-off sentiment as equities decline. “The gold market wants to see a record high,” Staunovo noted, emphasizing that current conditions—marked by declining equities and bond yields—are providing robust support for the precious metal.
The Role of Gold as a Safe-Haven Asset
Gold’s appeal as a safe-haven asset is underscored during periods of economic uncertainty, particularly when interest rates are low and geopolitical risks are heightened. As the Federal Reserve signals the potential for additional interest rate cuts, non-yielding assets like gold become increasingly attractive to investors looking to protect their wealth from inflationary pressures and market volatility. This trend has been reinforced by persistent geopolitical concerns, including uncertainties surrounding the upcoming U.S. presidential election and tensions in key global regions.
Soni Kumari, a commodity strategist at ANZ, highlighted the ongoing geopolitical landscape as a key factor supporting gold prices. “The uncertainty surrounding U.S. elections and geopolitical tensions will also support gold going forward,” Kumari said.
In parallel, the benchmark 10-year U.S. Treasury note yields have slipped to their lowest levels in over a week, further enhancing gold’s appeal as a non-yielding asset. As bond yields fall, the opportunity cost of holding gold diminishes, prompting more investors to pivot towards the precious metal as a defensive play.
Eyes on U.S. Economic Data
Market participants are eagerly awaiting the release of U.S. retail sales, industrial production, and weekly jobless claims data on Thursday. These reports are expected to provide more clarity on the strength of the U.S. economy and the Federal Reserve’s next steps regarding monetary policy. According to UBS’s Staunovo, stronger-than-anticipated data could potentially alter the current trajectory of interest rate cuts, but the overall outlook for gold remains positive.
“Gold needs stronger-than-expected data to change the rate-cut trajectory, but this should still boost investment demand and drive prices to a record high in the coming months,” Staunovo said.
San Francisco Federal Reserve President Mary Daly reaffirmed the central bank’s position, indicating that further reductions in borrowing costs are likely this year, provided that economic data remains in line with expectations.
At the recent London Bullion Market Association (LBMA) annual gathering, industry experts predicted that gold prices could rise to $2,941 per ounce over the next 12 months, with silver prices also expected to surge to $45 per ounce.
Precious Metals on the Rise
Gold is not the only precious metal experiencing gains. Spot silver rose by 1.2% to $31.85 per ounce, while platinum increased by 0.7% to $991.24 per ounce. Palladium also gained 0.6%, trading at $1,015.75 per ounce. The Guangzhou Futures Exchange has announced plans to launch platinum and palladium futures in the first quarter of 2025, a move that is expected to bring additional liquidity to the markets for these metals.
Choosing GoldenCrest Metals for Your Gold IRA Investment
With gold prices nearing record highs and uncertainty prevailing in global markets, there has never been a more opportune time to consider a Gold IRA as part of your investment strategy. Gold IRAs allow investors to safeguard their retirement savings with physical gold, offering a hedge against inflation, economic downturns, and geopolitical risks. At GoldenCrest Metals, we specialize in helping investors build a secure financial future through the power of precious metals. If you are interested in diversifying your retirement portfolio with a Gold IRA, contact GoldenCrest Metals today to learn more about how we can assist you in making the best investment choices for long-term security.
Source: https://www.reuters.com/markets/commodities/gold-ticks-up-treasury-yields-slip-us-retail-sales-data-focus-2024-10-16/
