Gold advances towards record highs

Gold advanced towards record highs on Wednesday as gains in non-yielding bullion were bolstered by weakness in U.S. bond yields and expected rate cuts by major central banks, with additional safe-haven support from ongoing geopolitical conflicts.

Spot gold rose 0.7% to $2,681.50 per ounce by 9:30 a.m. ET (1330 GMT), just a whisker away from record high of $2,685.42 it hit on Sept. 26. U.S. gold futures gained 0.7% to $2,698.20.

Expectations of a 25-basis-point rate cut by the U.S. Federal Reserve in November are solidifying, weaker inflation data in Europe and the UK have increased expectations for more aggressive easing from the central banks, leading to generally lower yields which have lifted gold, said Peter A. Grant, vice president and senior metals strategist at Zaner Metals.

“There’s even an outside chance we could see close to $3,000, and that’s probably more of a Q1 2025 target,” Grant said.

US Treasury yields fell to their lowest in over a week, making gold more attractive as it tends to thrive in a low interest rate environment.

Traders currently see about a 96% chance of a 25-basis-point U.S. rate cut in November, according to the CME FedWatch tool.

The European Central Bank looks set to deliver another rate cut on Thursday, while a drop in British inflation indicated a rate cut next month by the Bank of England.

The main bullish drivers for gold include risk of fiscal instability, safe-haven appeal, geopolitical tensions, de-dollarization, U.S. Presidential election uncertainties and rate cuts by central banks, said Ole Hansen, head of commodity strategy at Saxo Bank.

Delegates to the London Bullion Market Association’s annual gathering predicted gold prices would rise to $2,941 over the next 12 months and silver prices would jump to $45 per ounce.

Spot silver firmed 1.5% to $31.94. Platinum rose 1.1% to $995.40 and palladium climbed 1% to $1,019.83.