(Reuters) – The price of gold hit a record high on Monday, extending its meteoric rise amid uncertainty surrounding the U.S. presidential election, tensions in the Middle East and interest rate cuts by major central banks.
After hitting an all-time high of $2,735.92 earlier in the day, spot gold rose 0.55% to $2,728.29 around 10:30 GMT.
US gold futures showed an increase of 0.73% to $2,748.6.
Gold, seen as a safe haven in times of economic and political unrest, has risen 32% since the start of the year.
“Uncertainty over the outcome of the US presidential election is one factor supporting hedging demand for gold, the other likely being geopolitical tensions in the Middle East,” said Giovanni Staunovo , analyst at UBS.
Supported by the bullion rally, spot silver rose 1.15% to $34.04, its highest level since the end of 2012.
“This month’s rally is driven more by safe haven demand due to geopolitical tension in the Middle East and uncertainty surrounding the US election as the outcome looks very close, everyone can win ” said Soni Kumari, commodities strategist at ANZ.
Former Republican President Donald Trump and Democratic Vice President Kamala Harris are neck and neck in polls on voting intentions for the November 5 election.
Uncertainty also hangs over the situation in the Middle East, as Israel continues its offensive against the Palestinian movement Hamas in the Gaza Strip and the Shiite movement Hezbollah in Lebanon.
The reduction in interest rates announced by the world’s main central banks, including the Federal Reserve (Fed) in the United States and the European Central Bank (ECB) in the euro zone, also strengthens the appeal of the precious metal compared to to bonds.
“We expect gold to reach $2,900 per ounce over the next 12 months, supported by further rate cuts from the Fed,” added Giovanni Staunovo.
Traders estimate a 90% chance that the Fed will cut rates in November, according to the CME’s FedWatch tool. The ECB cut rates by a quarter of a point last week and, according to sources, is ready to announce a further cut in December.
Investors are also digesting the announcement of the Chinese central bank’s reduction in key rates as part of a package of recovery measures for the world’s second-largest economy.
Platinum rose 0.54% to reach $1,016.91 per ounce, its highest level since mid-July.
(Reporting Rahul Paswan and Ashitha Shivaprasad in Bangalore; Diana Mandiá, edited by Blandine Hénault)
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