Investment fund demand fuels gold price surge: Gold Bullion
Global gold price is trading on Tuesday, near the historical level it recorded on Monday, as demand for the precious metal continues to increase amid ongoing uncertainty with the upcoming US elections. Additionally, there is significant demand for gold investment funds, alongside persisting geopolitical tensions in the Middle East.
The price of an ounce of gold rose by 0.6% Tuesday, reaching a high of $2,738 per ounce, after opening at $2,719 per ounce, and is currently trading at $2,734 per ounce, according to Gold Bullion’s technical analysis.
Gold prices surged on Monday to reach a historic high of $2,740 per ounce before paring gains and closing lower at $2,719 per ounce. This marks a 32.6% increase in gold prices since the start of 2024.
Gold is considered the primary hedge against political and economic uncertainty, which has led to a significant rally in recent days as the U.S. presidential election approaches. The election is marked by uncertainty, with polls showing a close race between the candidates, leaving the outcome undecided between the Republican candidate and former President Donald Trump and the Democratic candidate, Vice President Kamala Harris.
Markets seem to be targeting the $2,800 per ounce level, as political uncertainty is expected to persist as the election nears. According to technical analysis from Gold Bullion, the current trend in gold may continue until the U.S. election results are announced or at least until there is a clearer indication of which candidate is leading.
Meanwhile, rising tensions in the Middle East continue to sustain demand for gold as a safe-haven asset, preventing a prolonged negative correction in its price.
Market expectations now indicate an 87% probability that the Federal Reserve will cut interest rates by 25 basis points at its upcoming meeting in November. Additionally, the yield on 10-year US government bonds surged to a three-month high of 4.222%, which has increased demand for the dollar.
However, it is worth noting that despite the rise in dollar and government bond yields, gold remains resilient and continues to climb, reaching historic levels. This is despite the inverse relationship typically seen between gold, the dollar, and bond yields, a trend driven by the current strong demand for safe-haven assets in financial markets.
On the other hand, the World Gold Council announced a significant increase in cash inflows to gold-backed exchange-traded funds (ETFs) during the week ending 18 October, reaching the highest level in a year, with inflows amounting to 23.7 tonnes of gold. North American gold ETFs contributed 13.2 tonnes, Europe added 4.6 tonnes, and Asian funds added 5.8 tonnes of gold.
This substantial rise in inflows into gold investment funds indicates that investors believe there is still more potential for gold to gain, and that it remains the best investment option.
In Egypt, gold price rose at the start of Tuesday’s trading session, continuing to hover near the highest level recorded yesterday, coinciding with global gold reaching a new all-time high. Various factors are currently contributing to pushing gold prices higher.
The most popular gold type, 21-karat gold, opened today’s trading at EGP 3,730 per gram, trading at EGP 3,728 per gram at the time of writing this report by Gold Bullion, after slightly dipping to EGP 3,727 per gram. On Monday, the price closed at the same level as the opening, EGP 3,715 per gram, after reaching a high of EGP 3,740 per gram during the day.
Gold prices in Egypt today are fluctuating near the peak recorded on Monday, supported by the significant rise in global gold prices and the new historic levels reached the previous day.
The exchange rate of the U.S. dollar against the Egyptian pound has gradually increased in official banks, which contributes to the rise in local gold prices, although its impact has been relatively weak recently as local pricing is primarily influenced by changes in global gold prices.
Additionally, the Egyptian government has requested the International Monetary Fund (IMF) to extend the period needed to implement the reforms required for the economic reform program. This follows the Egyptian president’s indication that the position with the IMF and its economic program for Egypt should be reviewed if the current challenges lead to significant pressure on the public.
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