Gold prices recouped some of Thursday’s losses and remained near record levels due to increased safe-haven demand ahead of US elections next week.
The political uncertainty surrounding the outcome of next week’s elections has spurred haven demand throughout this week.
Additionally, geopolitical tensions also continued to simmer as reports claimed that Iran was preparing to attack Israel
Gold prices on COMEX hit a series of new highs this week. The most-active contract on COMEX hit a lifetime high of $2,801.80 per ounce on Wednesday.
At the time of writing, the December gold contract on COMEX was at $2,762.40 per ounce, up 0.5% from the previous close.
Han Tan, chief market analyst at Exinity Group, told Fxstreet:
Gold should retain its upward bias and may even flirt with $2,800 in the days ahead, as long as US election risks continue weighing on market sentiment, while Fed rate cut expectations remain intact.
Increasing safe-haven demand
Increased safe-haven demand for gold during the past couple of weeks has been the main driver for prices.
In October, prices climbed more than 5%, which is a fourth straight month of gains. Since the start of this year, gold prices on COMEX have jumped over 30%.
Recent polls showed that former US President Donald Trump and Vice President Kamala Harris were locked in a tight battle. The uncertainty over the political scenario was aiding the safe-haven demand for gold.
Meanwhile, Iran is likely to attack Israel from Iraqi territory in the coming days, possibly before the US Presidential elections next week, Axios reported.
The attack is expected to be carried out from Iraq using a large number of drones and ballistic missiles, according to the report.
Iran and Israel have been engaging with each other over the last month in carrying out drone strikes. Any further escalation in tensions in the region would likely spur more demand for safe-haven assets such as gold.
Positive US economic data
On Thursday, the US personal consumption expenditure index rose 2.1% every year in September, compared to 2.2% in August.
On a monthly basis, the PCE index rose 0.2% in line with market expectations. The yearly figure was also in line with the forecasts of analysts.
The core PCE index, which excludes volatile food and energy prices, jumped 2.7% in the same period, matching August’s rise and above market estimation of 2.6%.
Additionally, the US initial jobless claims for the week ending October 26 fell to 216,000 from 228,000. The figure was below the forecast of 230,000 for the week.
The positive data indicates that the labor market remains resilient in the US, which could complicate the US Federal Reserve’s interest-rate cut cycle.
Markets are currently pricing in almost a 100% probability of the Fed cutting interest rates by 25 basis points at next week’s meeting. The Fed had cut interest rates by 50 bps at its September meeting, surprising the market.
Investors will be waiting for the release of the monthly non-farm payroll data later on Friday.
Copper experiences steep losses
Copper prices on the London Metal Exchange rose on Friday but declined 3% in October.
Prices have struggled to break out and breach the psychologically important level of $10,000 per ton, which it had hit in early October.
At the time of writing, the three-month copper contract on the London Metal Exchange was at $9,567.50 per ton, up 0.1% from the previous close.
Prices have been falling since then on concerns over poor demand from China, the top consumer of the red metal.
On Thursday, China’s purchasing manager index data offered little support to prices. Manufacturing activity in the Asian giant managed to just expand in October. Non-manufacturing activity, however, rose at a slower pace.
A report from Reuters claimed that China planned to roll out $1.4 trillion in more debt over the coming years, aimed at boosting the economic growth in the country.
Investors will be waiting for a meeting of China’s National People’s Congress next week for more cues on fiscal stimulus.
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