Gold heading for its best month in seven

Gold remained just under its all-time high on Thursday 31 Oct, 2024, on track for its best monthly performance in seven months, fueled by safe haven buying amid a fiercely contested U.S. presidential election, while investors anticipate the release of an important U.S. inflation report. Spot gold decreased by 0.3% to $2,778.47 per ounce by 1124 GMT, after reaching a peak of $2,790.15 earlier in the day. This month, gold prices have surged nearly 6%. U.S. gold futures experienced a 0.4% decline, settling at $2,789.40.

Opinion polls are closely matched, making it difficult to predict a victor between Republican former President Donald Trump and Democratic Vice President Kamala Harris in the eagerly awaited conclusion of the U.S. election. The factors driving gold demand include geopolitical tensions and uncertainties surrounding the election outcome, leading to a market behavior characterized by a “buy-on-dips” strategy, according to analyst Rhona O’Connell from StoneX.

“Gold and the (U.S.) dollar are functioning together as safe havens, which is typical in times of conflict.” Investors are currently looking ahead to the U.S. core personal consumption expenditures (PCE) and weekly jobless claims data, scheduled for release at 1230 GMT, with the payroll report set for Friday. Market participants are anticipating a 96% probability of a quarter-basis-point rate cut by the Federal Reserve next week.

In addition, UBS has projected a price target of $2,900 per ounce for gold by the end of the third quarter in 2025. “A win for Trump could accelerate gold’s movement toward our target, whereas a Harris win might see it retreat to the $2,600-2,700 per ounce range,” UBS noted. Rising expectations of a Trump victory have fueled the gold rally, influenced by his stances on trade tariffs, increased government spending, reduced taxes, and lower interest rates, according to UBS.

Gold is viewed as a secure investment during periods of economic and geopolitical instability and tends to perform well in low-interest-rate conditions. On Thursday, spot silver dropped by 0.9% to $33.49 per ounce, but it remains more than 7% up for the month. Platinum fell by 0.5% to $1,003.90, while palladium saw a decline of 2.1% to $1,123.29, as it heads toward its most favorable month since January 2022.