Gold reaches record high as geopolitics drive traders to safety

Gold hit a record high, as it receives sustained haven demand with investors monitoring the approaching US election and conflict in the Middle East.

Bullion edged up to $2,750.34 on Wednesday, beating Tuesday's peak by about $1, with geopolitical risks taking center stage as traders focused on a tight US presidential race and concerns that conflicts between Israel and Iran may escalate into a wider war. Bullish sentiment has also spilled over to the wider precious metals complex, with silver within striking distance of $35 an ounce, which it last reached in 2012.

The flight to safety has helped offset pressure from a selloff in US government bonds in recent days, as traders bet on a slower pace of easing by the Federal Reserve. Normally, higher yields and tight monetary policy settings tend to weigh on the precious metal, as it doesn't pay interest.

"Gold's ability to latch on to coattails that take prices higher irrespective of the macro backdrop suggests that the market continues to see positive underlying flows," Standard Chartered Plc analyst Suki Cooper wrote in a note, adding that she expected further upside risk in coming weeks. The bank sees gold averaging $2,800 an ounce in the fourth quarter, with prices set to average $2,900 for the first three months of 2025.

The precious metal has surged by about a third this year, hitting successive highs, with the rally intensifying in the last couple of months as the Fed pivoted to cutting interest rates. Money managers have also added to the strength of the rally, with hedge funds increasing net-long positions in gold in recent sessions and investors adding to exchange-traded fund holdings.

Spot gold was little changed at $2,750.22 an ounce as of 12:37pm in Singapore. The Bloomberg Dollar Spot Index edged up. Silver fell, palladium was steady, while platinum rose.