(News Bulletin 247) – The precious metal exceeded $2,500 per ounce on Friday, benefiting from its status as a safe haven and expectations of a drop in key rates by the American Federal Reserve.

Gold hit a new all-time high on Friday, breaking its previous record set in mid-July at $2,500.16 an ounce, as investors flocked to the safe haven amid prospects of U.S. rate cuts and geopolitical risks.

At around 4 p.m., the price of an ounce of gold rose by 1.24% to $2,487.50, after the publication of gloomy data on new housing construction in the United States in July, a new unfavorable signal for the American economy.

Faced with fears of a recession in the world’s largest economy, markets have increased their expectations of rate cuts by the Federal Reserve (Fed), which could support the economy.

“The sharp decline in bond yields” and the dollar, “in the context of expectations of rate cuts from the Fed, benefits assets with zero or low yields,” such as gold, explains Fawad Razaqzada, analyst at City Index.

Safe haven par excellence

In addition, gold remains “in demand as a ‘safe haven’ in a tense geopolitical context,” recalls Carsten Fritsch, analyst at Commerzbank.

Diplomatic efforts are intensifying to secure a truce in the Gaza Strip and avoid a full-scale war in the Middle East, with negotiations expected to resume in Doha, Qatar, on Friday and discussions between French and British ministers in Israel.

Iran has indeed threatened to attack Israel in response to the assassination, attributed to Israel, of Hamas leader Ismail Haniyeh on July 31 in Tehran.

The risk of a military escalation across the region has redoubled following the assassination of Haniyeh and that, on July 30, of Fouad Chokr, military leader of the Lebanese Hezbollah movement, killed in an attack claimed by Israel near Beirut.

On Thursday, a deadly attack by Jewish settlers in a village in the occupied West Bank sparked outrage, including in Israel.

(With AFP)