Gold prices soared to an all-time high on Monday, surpassing $2,700 an ounce, as mounting geopolitical tensions in the Middle East and growing uncertainty over the US presidential election fueled demand for safe-haven assets. The yellow metal has surged more than 32% in 2024, outpacing 2007’s 31% rise and marking the largest annual gain since 1979, when prices skyrocketed by 127%.
The bullish momentum has also spread to silver, which reached its highest level since 2012, reflecting broader investor interest in precious metals.
Geopolitical Tensions Push Gold Higher
Investor anxiety is rising amid the escalating conflict in the Middle East, where Israel is preparing its next offensive against Iran. On Saturday, a Hezbollah drone exploded near Israeli Prime Minister Benjamin Netanyahu’s private residence, intensifying the standoff. A day later, Israel launched fresh military strikes on Hezbollah strongholds in Lebanon, according to Bloomberg.
The hostilities between Israel and Hezbollah come on the heels of an Iranian missile strike at the start of October. Israel has pledged retaliation, heightening fears of a broader regional conflict that could destabilize global markets.
The increasing likelihood of a direct confrontation between Israel and Iran is causing ripples in global markets, especially in commodities like gold, which traditionally serve as a hedge against uncertainty. Analysts suggest that any further escalation in the Middle East could have significant repercussions for global energy supplies and market stability, further boosting demand for safe-haven assets.
US Election Adds to Uncertainty
In addition to the Middle East conflict, traders are closely watching the tight US presidential election race, which could tip the scales further in favor of gold. Polls suggest that the November 5 contest between incumbent President Donald Trump and challenger Kamala Harris is shaping up to be one of the closest elections in recent history.
The uncertainty surrounding the election outcome has prompted many investors to seek refuge in gold, which is seen as a safe store of value during periods of political and economic instability. Historically, gold tends to perform well in times of uncertainty, and the volatile political landscape in the US is reinforcing its appeal.
President Joe Biden, who has previously voiced concerns over Israel’s planned counterstrikes against Iran, hinted over the weekend that he had knowledge of Israel’s military plans but refrained from revealing specifics. With both the geopolitical and electoral landscapes in flux, the uncertainty is driving investor sentiment toward risk-off assets like gold.
Analysts Predict Further Gains
The rally in gold may continue well into 2025, according to analysts at Commonwealth Bank of Australia. In a note released Monday, analyst Vivek Dhar projected that gold prices could average $3,000 an ounce in the fourth quarter of 2025. A key driver behind this outlook is the ongoing weakness in the US dollar, which has been weighed down by the Federal Reserve’s rate-cutting cycle.
Since the Fed began easing interest rates last month, gold prices have found additional support as a lower US dollar makes gold cheaper for international buyers. Furthermore, the central bank’s dovish monetary policy stance is expected to remain in place, further bolstering demand for bullion.
Dhar also noted that central bank buying has been a critical factor in sustaining gold’s upward trajectory. Several countries, particularly in Asia, have significantly increased their gold reserves in recent years as part of a broader strategy to diversify away from the US dollar.
Silver Rides the Coattails of Gold’s Rally
Silver, often referred to as “gold’s little brother,” has also seen a sharp rise in demand amid the current market conditions. The metal has surged to its highest levels since 2012, benefiting from both its role as a safe-haven asset and its industrial applications.
While gold continues to capture the headlines, silver’s gains are also notable, especially given its dual role as both a precious metal and a key component in manufacturing sectors like renewable energy and electronics. The strong demand for silver highlights the broader investor shift toward tangible assets during periods of economic and geopolitical uncertainty.
Outlook for Gold
As investors grapple with the twin pressures of geopolitical risk and political uncertainty, gold’s status as a safe-haven asset remains robust. With potential flare-ups in the Middle East and a nail-biting US election just weeks away, analysts expect gold prices to remain elevated in the near term.
If the current trends continue, gold’s performance in 2024 could surpass expectations, with some market watchers forecasting further upside heading into 2025. For now, traders and investors alike will be keeping a close eye on developments in both Washington and the Middle East, as the yellow metal solidifies its position as one of the year’s best-performing assets.
