GOLD PRICE EXCEEDS $2,800 PER OUNCE FOR THE FIRST TIME IN HISTORY

Gold prices rise amid tensions in the Middle East and Eastern Europe, as well as uncertainty over the outcome of the US presidential election and the future prospects of the US economy.

Gold prices have crossed the $2,800 per ounce mark for the first time. The price of the December gold contract on the Chicago Mercantile Exchange (CME) on Wednesday, October 30, rose 0.7% to $2,800.5 per ounce.

Analysts attribute the new record highs in the gold market to increased demand for safe-haven assets amid uncertainty over the U.S. election results and ongoing concerns about escalating military conflict in the Middle East. Investors are using gold as a hedge against geopolitical and economic risks.

The gold market rally is also fueled by concerns about the U.S. economic outlook and expectations of renewed consumer price growth, said Dmitry Scriabin, portfolio manager at Alfa Capital. Gold purchases by central banks in several countries - India, China, Turkey - to diversify their gold and foreign exchange assets are providing additional support to demand.

Two major catalysts (safe haven demand and inflation hedging) are almost completely blocking the U.S. dollar rally. Gold and the dollar usually move inversely correlated, but now they are rising in price in parallel — both as “safe haven” instruments and as inflation hedges, Dmitry Scriabin said.

“The need for portfolio diversification continues to drive inflows into gold, whether investors base their views on the continued rise in long-term U.S. government debt, systemic risks in global financial markets, or potential corrections in overvalued stocks,” said consultancy Metals Focus.

Gold prices have risen more than 30% since the start of 2024. Gold prices rose to new records in September after the US Federal Reserve began its monetary easing cycle, cutting interest rates for the first time in more than four years. After its meeting on September 17-18, the Fed lowered the rate by 50 basis points to 4.75-5% per year. Before that, the US rate had been at its highest level in more than 20 years for more than a year. At the auction on October 21, gold prices rose above $2,750 per ounce for the first time.

Lower rates are generally positive for gold. According to the CME FedWatch tool, as of October 30, market participants expect the Fed to cut the rate by 25 basis points. at the next meeting with a probability of about 98.9%. The next US Federal Reserve rate meeting will be held on November 6-7.

BCS World of Investments predicts that the factors of geopolitical instability, central bank demand and monetary policy easing in several countries will not lose relevance in the coming year and will have a positive assessment of the prospects for gold. According to experts, the peak of gold prices should be expected in the first quarter of 2025, after which the price will stabilize and begin to gradually decline.

Commonwealth Bank of Australia analyst Vivek Dhar said gold futures could rise to an average of $3,000 an ounce as early as the fourth quarter of 2025. He noted that the Fed’s rate-cutting cycle would likely lead to a weaker dollar. A weaker dollar makes gold cheaper for many buyers.