Gold and Silver Prices Surge Amid Geopolitical Tensions and Election Uncertainty

This week gold prices hit new highs across multiple currencies, driven by escalating geopolitical tensions, and uncertainty surrounding the U.S. presidential election, alongside expectations of continued monetary easing – with a fresh dose of uncertainty relating to the FED interest rate path. By Tuesday, the spot gold price had risen 0.9% to US$2,746.69 per ounce, briefly reaching a record US$2,748.23 earlier in the session.

Gold’s appeal as a hedge against economic instability has fuelled its remarkable 33% rise this year and nine weeks in a row of positive gains when measured in AUD. Can the momentum continue? We look to analysts' takes and review current key drivers…

Peter A. Grant, senior metals strategist at Zaner Metals, noted that "geopolitical tensions are the primary catalyst." He added, "With the election just weeks away and the uncertain outcome, safe-haven demand for gold remains robust. If Middle East conflicts escalate further, gold could touch US$3,000 by year-end, though Q1 2024 seems more likely."

Looking at U.S. election polls… recent polls show Vice President Kamala Harris leading former President Donald Trump by a narrow margin of 46% to 43%. Betting markets see Trump winning comfortably. Analysts at BNP Paribas highlighted that the tightening race has heightened political uncertainty, further boosting gold’s appeal.

From a technical perspective, gold’s Relative Strength Index (RSI) stands at 74, indicating that a cool-off could be around the corner.

Silver also saw significant gains, rising 3.2% to $34.84 per ounce, its highest level since 2012. Exinity Group’s chief market analyst, Han Tan, predicted silver could surpass $35 per ounce ahead of the November 5 election, provided favourable market conditions persist.

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