Gold prices soared past the $2,700-per-ounce level for the first time on Friday, largely due to rising tensions in the Middle East. Analysts attribute the growing demand for gold, a traditional safe-haven asset, to a mix of economic instability and declining interest rates. By Friday evening in New York, gold prices had increased by 0.8 percent to $2,713.70, marking a weekly gain of 2.1 percent and solidifying its position as one of the year’s top-performing commodities, with a nearly 32 percent rise since January.
Equities on Wall Street also saw significant gains, reaching new heights. The Dow Jones Industrial Average extended its record-breaking streak with an increase of 36.86 points, or 0.1 percent, closing at 43,275.91, representing its 40th record close this year and a weekly increase of 1 percent.
The S&P 500 climbed 23.20 points, or 0.4 percent, to finish at 5,864.67, achieving its 47th new high since the start of the year, and reflecting a weekly gain of 0.9 percent.
The Nasdaq composite ended the day up 115.94 points, or 0.6 percent, closing at 18,489.55, which was a 0.8 percent rise for the week but still short of its record close of 18,647.45 set on July 10. Recent gains in gold may seem contradictory, considering the European Central Bank’s interest rate cut and the dollar’s rise, according to Philip Newman, managing director of Metals Focus. Gold typically appreciates when interest rates dip, and with robust U.S. economic data, markets largely anticipate a 25-basis-point interest rate cut by the Federal Reserve in November. Additionally, there’s uncertainty surrounding the upcoming presidential election, which contributes to investment flows into gold.
Chris Beauchamp, chief market analyst at IG, noted that gold prices are likely to continue an upward trajectory owing to ongoing geopolitical tensions, central bank purchases, and falling interest rates. This year has been particularly favorable for gold enthusiasts, with no clear signs of a reversal in gains.
Global central banks are actively increasing their gold reserves for both financial and strategic diversification. According to the World Gold Council, central banks raised their purchases by 6 percent to 183 tons in the second quarter of this year. Market analyst Frank Watson at Kinesis Money indicated that while gold prices should continue to trend higher, they may encounter resistance near $2,750 per ounce. The recent interest rate reductions by the ECB, Bank of England, and the Fed have sparked new interest in gold acquisitions, as noted by BullionVault.