Gold prices rose by 0.35%, again updating the record high set the day before. The precious metal continues to rise in price, despite the strengthening of the US currency and rising US bond yields, which usually puts pressure on gold.
Meanwhile, a change in expectations about how quickly and strongly the Fed will cut interest rates - traders now predict that the Fed will be measured in its easing - has also failed to stop the rise in gold prices. Markets are currently pricing in 0,41% of cuts for the year, with another 1% priced in for next year. According to the CME FedWatch Tool, markets see a 88.9% probability of a 0.25% rate cut at the November meeting (down from 93.7% a week earlier) and a 67.0% probability of a 0.25% rate cut in December (compared to 85.6% a week earlier).
The prospect of a Donald Trump presidency has also been in the spotlight of investors, as his policies, including tariffs and restrictions on illegal immigration, are expected to lead to higher inflation. Trump's chances of defeating Kamala Harris have recently increased on betting websites, though opinion polls show the race to the White House remains too tight to call.
Overall, the conflict in the Middle East, as well as uncertainty about the prospects for Fed policy and the US elections, have increased demand for safe haven assets. Since the beginning of 2024, gold prices have increased by about 33%.