Gold on record-breaking run

The current upward dynamic is an exceptional development, with gold prices reaching new highs daily. Record levels which recently still seemed unattainable are scaled, one after another. A new all-time high will likely be reached before this article is published. The primary driver: the US election on 5 November. In addition, the uncertainty about the outcome of the election and the developments to follow are causing investors to seek out safe havens. Discussions about soaring national debt (especially, but not exclusively, in the US) remain very relevant. Gold prices are thus benefiting from investors’ penchant for an asset that could be in high demand as debt ratios rise.

Gold demand remains high

The fact that gold is in exceedingly high demand despite sharply rising yields and a currently appreciating US dollar is remarkable. Yields on ten-year US treasury bonds have again risen above the 4.2 per cent mark, and the euro dropped to 1.0791 against the US dollar yesterday. Both yields and the US dollar thus reached levels last seen in late July/early August, before the brief market turbulence set in. At that time, gold traded at 2,400 US$ per ounce.

Today, the situation is quite different. Last Thursday morning, the precious metal traded at 2,679 US$ per ounce. By Monday afternoon, it had climbed steadily to 2,740 – setting one record high after another and correcting slightly to 2,715 intraday. This, however, seems to have been just a breather before the next record. This morning, gold climbed to 2,753 US$ and started European trading at around this level.

Xetra-Gold at all-time high

Xetra-Gold also jumped from one record high to another, and due to the weaker euro, its rise was more pronounced, climbing from 79.30 € per gram last Thursday morning to 81.60 yesterday afternoon and thereby marking a new all-time high. Xetra-Gold is expected to start the European trading day at around 81.95 € per gram, provided the level at 8:00 this morning remains unchanged, and thus kick off trading with a new all-time high.

All eyes on US elections  

The US elections and their outcome will likely dominate the financial markets in the coming weeks. Next week, investors will also be paying attention to the publication of important data such as October consumer prices in the eurozone and US labour market data, which are also likely to have some market relevance.

May the golden October and gold prices continue to warm investors’ hearts and portfolios as we approach the darker moths of the year.