Gold’s price has continued its strong rally, and reached a new high. Investors have flocked to gold as a safe-haven asset amid the expectation of more interest rate cuts by central banks.
Bullion reached a new record price of nearly $2,733 per troy ounce on Friday, after surpassing the $2,700 level. This brings the gain of the precious metal over the last year to almost 40%, making it the best performing asset class of the past twelve months.
Investors have priced in a 99 percent chance that The Federal Reserve will cut rates at their next meeting, which is scheduled for November. Gold’s appeal increases as rates fall, since it offers investors no return.
On Friday, the European Central Bank lowered its key deposit rate from 3.5 to 3.25 percent, its first consecutive rate cut in over a decade. The European Central Bank made the move after a series of data confirmed concerns that the largest economies in Europe are struggling.
China also cut its benchmark rates of lending as part of an package of stimulative measures designed to revive the economy .
Investors are also uncertain about the outcome of the US Presidential election scheduled for November 5. In a closely contested race, Kamala is just a little bit ahead of Donald Trump.
The tensions in the Middle East remain high, as Iran claims that it warned the United Nations of Israel threats to its nuclear sites. Israel has promised to retaliate for the series of missile strikes on Iran that took place on October 1.
In times of geopolitical and economic uncertainty, gold is seen as an investment. Gold’s price has been driven up by central banks who are eager to diversify reserves for strategic or financial reasons. According to the World Gold Council, global central banks increased their purchases of gold for reserves by 6 percent to 183 tons in the second quarter this year.
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