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Gold surged to an all-time high on Monday, hitting its sixth record this year, fuelled by geopolitical tensions and central bank interest rate cuts.
The bullion’s price climbed 0.4 per cent to $2,732.45 a troy ounce in early trading in London on Monday, representing a 43 per cent gain since the start of this year.
The war in the Middle East, coupled with uncertainty over the outcome of next month’s US election, have supercharged gold’s allure as a haven asset.
“The outlook for gold is quite bullish,” said UBS precious metals strategist Joni Teves, who has a $3,000 a troy ounce price target next year. “We think that investor holdings of gold have a lot of room to grow over the next year or so, and that should drive prices higher.”
The anticipation of further rate cuts, with the US Federal Reserve next meeting on November 6-7, has also helped propel gold prices this year. Gold does not yield any interest, so prices typically benefit from falling interest rates.
Although physical gold demand has been dented by high prices in the top market China, buying from central banks has been very strong as they diversify their reserves away from the dollar.