On Monday (October 21), during the Asian trading session, spot gold prices quickly rose, reaching a high of $2729.15 per ounce, setting a new historical high. The strong performance of gold prices is mainly supported by the escalation of the Middle East situation and the global market's demand for safe-haven assets. At the same time, unexpected interest rate cuts by central banks in major Asian economies accelerated market expectations for accommodative monetary policy.
China's October Loan Prime Rate (LPR) was announced, with the one-year and five-year rates lowered by 25 basis points, a larger cut than the market expected. Analysts believe this aligns with China’s recent implementation of a series of growth-stabilizing policies, aimed at boosting the real economy by reducing borrowing costs.
In terms of Middle Eastern geopolitics, Israel is discussing a potential attack on Iran in response to a drone incident near Prime Minister Netanyahu’s residence. Meanwhile, the fierce competition in the U.S. election is also drawing significant market attention. The latest polls show a remarkably close race between Trump and Kahlary, prompting investors to readjust their portfolios. Gold, as a safe-haven asset, is highly favored during such periods of geopolitical and economic uncertainty.
Alexander Zumpfe, a precious metals trader at Germany's Heraeus Metals, pointed out that as the Middle East conflict intensifies, investors are flocking to gold. Additionally, the U.S. election and expectations for accommodative policies from the Federal Reserve are major drivers of the rise in gold prices. Gold has performed outstandingly in 2024, with an increase of more than 30% within the year. The Federal Reserve started an easing cycle last month, and market expectations for further rate cuts have supported the recent strong trend in gold prices, while strong purchases by global central banks have provided long-term support for gold prices.
With geopolitical risks and macroeconomic uncertainties persisting, the gold market is expected to continue benefiting from safe-haven demand and the support of accommodative monetary policies.
