The price of gold continues to rise to new heights! Risk aversion heats up, spot gold rises above $2,700

Zhitong Finance learned that the price of spot gold surpassed 2,700 US dollars per ounce for the first time, prompting investors to flock to safe-haven assets due to concerns about the escalation of the Middle East conflict. On Friday, the price of gold rose 0.5% to 2706.81 US dollars/ounce, after Israel said it had killed Hamas leader Yahya Sinwar (Yahya Sinwar). Sinwar planned the Hamas attack on southern Israel, triggering the year-long war in Gaza.

As of press time, spot gold was trading at $2706.10 per ounce. The Bloomberg Dollar Spot Index fell 0.1%, ending four consecutive days of gains. Silver, palladium, and platinum all rose.

Israeli Prime Minister Binyamin Netanyahu said that Israel will continue to fight until all hostages taken by Hamas last year are freed, even though US President Joe Biden said that now is the time to end the war. In times of geopolitical and economic uncertainty, investors often seek safety in gold.

The demand for safe-haven overshadowed macro-adverse factors that usually put pressure on gold, after a report released by the US on Thursday reduced bets on the extent of the Federal Reserve's easing. Retail sales in the US increased more than expected in September. Another data showed an unexpected drop in the number of initial jobless claims, reinforcing the view that the US economy is far from falling into recession. An environment where interest rates rise usually puts pressure on non-yielding gold.

The price of gold rose by nearly 2% this week, and investors also readjusted their portfolios before the November 5 US election. Since the two candidates pose different risks to the US economy, whether Trump or Harris wins, gold is likely to receive further support.

Gold prices rose more than 30% this year, making it one of the strongest performing commodities in 2024. As the Federal Reserve began an easing cycle last month, optimism about interest rate cuts has fueled recent gains. Strong buying by central banks around the world is also a long-term pillar supporting the price of gold. Western investors also helped push prices higher.

Moreover, in the first half of this year, demand in Asia soared as Western investors generally maintained a wait-and-see attitude. The Federal Reserve's shift to a more relaxed monetary policy has boosted the appeal of gold-backed exchange-traded funds (ETFs), whose gold holdings are expected to expand for the fifth month in October — the longest continuous inflow since 2020.