Gold prices experienced a notable increase of over 1% on Wednesday, buoyed by a slight pullback in the U.S. dollar and a growing risk-off sentiment among investors. Spot gold rose by 0.8%, reaching $3,966.54 per ounce by 1044 GMT, while U.S. gold futures for December delivery saw a smaller uptick of 0.4%, climbing to $3,976.10 per ounce. This year, gold prices have surged by approximately 52%, setting a record high of $4,381.21 on October 20.
Analysts attribute this trend to a shift towards a more cautious investment climate, as concerns over equity market valuations grow. Carsten Menke, an analyst at Julius Baer, noted that the current risk-averse mood has helped stabilize gold prices after their previous retreat from all-time highs. In parallel, European shares fell to a two-week low, reflecting heightened unease among global investors regarding stock valuations.
Additionally, the dollar index eased by 0.1% after reaching a more than three-month peak, making gold more accessible to buyers using other currencies. As the U.S. government approaches a potential record lengthy shutdown, attention is shifting towards unofficial economic indicators. Market watchers are particularly focused on the ADP National Employment Report, expected later on Wednesday, which may provide insights on the future trajectory of U.S. interest rates.
The U.S. Federal Reserve recently enacted a rate cut, with Chair Jerome Powell suggesting it might mark the final reduction for the year. The CME’s FedWatch Tool now indicates a 72% probability of another rate cut in December, significantly down from over 90% prior to Powell’s comments. In this context, gold, which does not yield returns like bonds or savings accounts, is often favored during low-interest-rate periods and economic uncertainty.
Menke further emphasized the ongoing demand for physical gold from safe-haven investors and emerging market central banks, highlighting the metal’s appeal in times of economic distress. In related markets, silver saw a 1.3% increase to $47.69 per ounce, while platinum dipped slightly by 0.1% to $1,533.91, and palladium rose by 0.4% to $1,397.46.
