Global Gold Prices Surge Amid Uncertainty
The global gold price is currently trading near historical levels as demand for the precious metal continues to increase amidst ongoing uncertainty surrounding the upcoming US elections. Investors are turning to gold as a safe-haven asset, with significant demand for gold investment funds and geopolitical tensions in the Middle East also supporting the rally.
Rising Gold Prices and Political Uncertainty
On Tuesday, the price of an ounce of gold rose by 0.6%, reaching a high of $2,738 per ounce. This surge came after gold prices hit a historic high of $2,740 per ounce on Monday before closing lower at $2,719 per ounce. The 32.6% increase in gold prices since the beginning of 2024 is indicative of the strong demand for the precious metal.
Gold is widely considered a hedge against political and economic uncertainty, making it a popular choice for investors leading up to the US presidential election. With polls indicating a tight race between the candidates, uncertainty is expected to persist until the election results are announced. This has fueled market speculation that gold prices could potentially reach the $2,800 per ounce level.
The Continued Role of Gold as a Safe-Haven Asset
Geopolitical tensions in the Middle East are also contributing to the demand for gold as a safe-haven asset. This factor, combined with the uncertainty surrounding the US elections, is preventing a prolonged negative correction in gold prices.
Despite the rise in the dollar and government bond yields, gold prices remain resilient and continue to climb to historic levels. This trend breaks the inverse relationship typically seen between gold, the dollar, and bond yields, highlighting the current strong demand for safe-haven assets in financial markets.
Influx of Investments in Gold ETFs
The World Gold Council reported a significant increase in cash inflows to gold-backed exchange-traded funds (ETFs) during the week ending 18 October. This influx of 23.7 tonnes of gold into ETFs, with North American, European, and Asian funds all contributing, signals investor confidence in the potential for gold to continue gaining value.
Insight on Egypt’s Gold Market
In Egypt, gold prices have also been on the rise, mirroring the global trend. The most popular gold type, 21-karat gold, opened trading at EGP 3,730 per gram and is currently trading at EGP 3,728 per gram. The exchange rate of the US dollar against the Egyptian pound has had a slight impact on local gold prices, but global trends continue to dominate.
The Egyptian government’s request to the International Monetary Fund (IMF) to extend the implementation period for required economic reforms reflects the country’s efforts to navigate through economic challenges. With global and local factors influencing gold prices, Egypt’s gold market remains closely connected to international fluctuations.
