Gold surges above historic threshold of $2,700-per-ounce

Gold surged above the historic threshold of $2,700-per-ounce on Friday, powered by escalating tensions in the Middle East, uncertainties around the U.S. elections and relaxed monetary policy expectations that pushed the metal into unchartered territory.

Spot gold gained 0.9% at $2,716.43 per ounce by 10:30 a.m. ET (1430 GMT). Prices hit a record high of $2,719.93 earlier in the session, setting bullion on track for a rise of about 2% this week.

“With the conflict intensifying – particularly following Hezbollah’s announcement to escalate the war with Israel – investors are flocking to gold, a traditional safe-haven asset,” said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany.

Pledges from Israel and its enemies Hamas and Hezbollah to keep fighting in Gaza and Lebanon dashed hopes that the death of a Palestinian militant leader might hasten an end to escalating war in the Middle East.

Rising geopolitical tensions prompt investors to seek safe-haven assets like gold, driven by risk aversion and concerns over global market instability.

“Adding to the momentum, concerns around the U.S. presidential election and anticipation of looser monetary policies have further fuelled the rally,” Zumpfe added.

Gold shattered records multiple times this year as expectations of more rate cuts by central banks and geopolitical uncertainties boosted prices by more than 30%, or over $650, so far this year, its best annual growth since 1979, as per LSEG data.

Lower rates enhance the appeal of bullion, which yields no interest on its own.

Sources told Reuters the ECB was likely to cut again in December unless economic data suggests otherwise. Traders are also pricing in a 91% chance of a Federal Reserve rate cut in November, according to the CME Fedwatch tool.

Max Layton, global head of commodities research at Citi, sees gold prices reaching $3,000/oz over the next 6-12 months, as a store of wealth in a time of high U.S. and European economic uncertainty, driving up ETF and investment demand.

Silver is expected to perform strongly to 35/oz over the next three months, Layton added.
Spot silver rose 2.5% to $32.49. Platinum added 0.9% to $1,000.75 and palladium gained 2.2% to $1,065.00.