Gold prices rose during the Asian trading period on Friday to a new record high, taking advantage of the demand for safe haven with just weeks to go until the highly competitive US presidential election, especially after the interest rate cut by the European Central Bank yesterday as well.
The precious metal rose to a historically unprecedented level at 2715 dollars per ounce, breaking the resistance levels at 2700, which was a psychological barrier to further ascent, as it is heading for the fourth consecutive day of gains.
But what drove gold to all this buying momentum?
First:- central banks are easing their monetary policies, making money more affordable by lowering interest rates, as the European Central Bank on Thursday made the third reduction of interest rates for this year by 25 basis points, and the Fed is looking forward to making its second cut to borrowing costs in November, after it cut interest rates by 50 basis points during its previous meeting.
Low interest rates reduce the alternative cost of holding gold, which does not pay dividends or generate any interest.
Secondly:- there are also the uncertain prospects of the US presidential election, where candidates Donald Trump and Kamala Harris differ in their views on capital market regulations, taxes, government spending and broader fiscal policy.
Third:- and last but not least, the tremors in the Middle East worsened on Thursday when the officials of the entity announced the killing of the leader and leader of Hamas, the martyr Yahya Sinwar, by enemy forces. Sinwar was the mastermind of the Al-Aqsa flood on the seventh of October last year, which sparked the ongoing war until now.
The uncertain prospects of the elections, the easing of central bank policies, and tensions in the Middle East contributed to the strong rise in bullion prices in general.
