Gold hits record high as US rate cuts and election jitters spur demand

Gold prices charged to an all-time high on Thursday as expectations of more U.S. Federal Reserve rate cuts and uncertainty over the U.S. presidential election boosted demand for bullion, while traders awaited U.S. economic data.

Spot gold rose 0.2% to $2,678.13 per ounce by 0934 GMT, after hitting a record high of $2,685.60.

U.S. gold futures gained 0.1% to $2,693.60.

“With the U.S. election less than three weeks away, market caution is likely to remain a key theme. Given the tight race between Donald Trump and Kamala Harris, this adds another layer of uncertainty – stimulating demand for safe haven assets,” said FXTM senior research analyst Lukman Otunuga.

Gold has added over 30% so far this year, with a record-breaking rally driven by expectations that the Fed will further cut rates this year after a jumbo reduction last month and on the ongoing geopolitical uncertainties.

The European Central Bank is also expected to make its first back-to-back rate cut in 13 years later in the day. Lower interest rates and geopolitical tensions tend to boost bullion, which is considered a safe asset and yields no interest. “The LBMA poll that came out from Miami earlier in the week, where the base look for gold prices was to rally near $3,000 in the next year and silver doing even better, I think that potential is also just attracting a bit of attention,” said Ole Hansen, head of commodity strategy at Saxo Bank.

The price of gold is expected to rise to $2,941, a troy ounce over the next 12 months from the current $2,661, delegates to the London Bullion Market Association’s annual gathering predicted earlier this week.

Traders are on the lookout for the U.S. retail sales and industrial production data for September and weekly jobless claims data due later in the day.

“A set of disappointing U.S. data may fuel bets around Fed rate cuts,” Otunuga added.

Elsewhere, spot silver fell 0.3% to $31.57 per ounce. Platinum rose 0.6% to $999.20 and palladium fell 0.4% to $1,019.56.