Gold Prices Reach Record High Amid Safe Haven Demand

Gold prices inched higher to a record high in Asian trade on Wednesday, extending a run of recent gains as anticipation of a tight U.S. presidential race and persistent tensions in the Middle East spurred safe haven demand.

Strength in the yellow metal came even as the dollar hit a near three-month high, amid growing bets that the Federal Reserve will cut interest rates at a slower pace. Other precious metals were also posting strong gains in recent sessions.

Spot gold rose slightly to a record high of $2,750.35 an ounce, while gold futures expiring in December rose 0.2% to $2,764.15 an ounce.

Gold Boosted by Safe Haven Demand

Gains in bullion prices were chiefly driven by increased safe haven demand, as traders positioned for a tight presidential election. Republican nominee Donald Trump was seen gaining an edge over Democrat Kamala Harris, according to some recent polls and online prediction markets.

However, analysts still judge the race as too close to call, with about two weeks left to the ballot. Demand for havens was also boosted by persistent tensions in the Middle East, as Israel maintained its offensive against Hamas and Hezbollah. While U.S. diplomats attempted to negotiate a ceasefire, there were no signs of de-escalation in the conflict. Israel is reportedly preparing a retaliatory strike against Iran.

Safe haven demand saw gold largely shrug off pressure from a stronger dollar and rising Treasury yields. Recent signs of resilience in the U.S. economy spurred increased bets that the Fed will cut rates by 25 basis points in November, smaller than the 50 bps cut seen in September. Traders were pricing in a higher terminal rate.

Other precious metals were mixed on Wednesday, cooling from recent rallies. Silver futures fell 0.5% to $34.885 an ounce, while platinum futures rose 0.5% to $1,046.10 an ounce.

Copper Retreats, China Stimulus in Focus

Among industrial metals, copper prices fell on Wednesday, with focus remaining on more stimulus measures in top importer China. A meeting of the National People’s Congress is set to provide more clues on fiscal spending later this month.

Benchmark copper futures on the London Metal Exchange fell 0.4% to $9,587.50 a ton, while December copper futures also fell 0.4% to $4.3718 a pound.

Copper prices had been nursing steep losses over the past two weeks after new stimulus measures from China were largely underwhelming, as Beijing did not provide details on the scale and timing of the planned measures.