Gold set for best year since 1979

October 21, 2024 (MLN): Gold surged to a fresh record above $2,700 on Monday as safe haven demand continue to support prices amid concerns over escalating conflicts in the Middle East and a tight US election race.

The yellow metal is up more than 32% so far this year, beating 2007’s 31% rise in prices, and the largest gain since 1979 when it rose 127%.

The bullish sentiment has also spilled over to silver, which has surged to the highest level since 2012.

Traders are monitoring the geopolitical situation in the Middle East, with Israel discussing its next attack on Iran.

On Saturday, a Hezbollah drone exploded next to Netanyahu’s private home, and the following day Israel opened up a fresh military assault on Hezbollah strongholds in Lebanon, Bloomberg reported.

Israel has already vowed to retaliate against Iran for a missile attack at the start of October.

A dial up in Israel-Iran hostilities may potentially spark a wider regional conflict and could sway the outcome of the US presidential elections in early November.

Israel has said that it’s considering Washington’s qualms over its planned counterstrike on Iran, and President Joe Biden hinted over the weekend that he had details on Israel’s plans, but stopped short of revealing what they were.

Traders were also repositioning portfolios ahead of the US election on November 05. Polls show the contest between Donald Trump and Kamala Harris could be the closest in a generation. Investors typically seek safety in gold in times of geopolitical and economic uncertainty.

Gold futures may rise to average $3,000 an ounce in the fourth quarter of 2025, Commonwealth Bank of Australia analyst Vivek Dhar said in a note on Monday.

The Federal Reserve’s rate-cutting cycle would likely drive weakness in the US dollar, he added. A lower greenback makes bullion cheaper for many buyers, as it’s priced in the US currency.

Bullion is one of 2024’s strongest performing commodities, with gains of more than 32% so far this year.

Rate-cut optimism fueled the most recent advances as the Fed kicked off its easing cycle last month. Robust central bank buying has also been a long-standing pillar of support for gold prices.

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