Gold tops $2,700 an ounce as Middle East tensions rise

Gold topped the $2,700-per-ounce mark for the first time yesterday, driven largely by escalating tensions in the Middle East.
The demand for gold, seen as a safe haven, has also been driven by a combination of economic uncertainty and falling interest rates, analysts have said.
UK gold prices rose to a height of £2,082 per ounce yesterday morning and US gold futures gained 0.6 per cent to $2,724.50.
Gold is one of the best-performing commodities of 2024, having enjoyed a year-to-date rise of more than 30 per cent.
Some of the rise initially appears counter-intuitive, given the European Central Bank interest rate cut and boost to the dollar, said Philip Newman, managing director of Metals Focus, but gold, which yields no interest on its own, tends to gain when interest rates are cut.
Furthermore, with recent strong US economic data, markets are overwhelmingly pricing in a 25-basis-point interest rate cut at the November Federal Reserve meeting, rather than one of 50 basis points. Uncertainty about the US election is also a boost for safe havens.
“What this therefore tells us is that investment inflows are meaningful,” Newman said. “The two key factors are nothing new: heightened Middle East concerns, with arguably a renewed focus after the killing of the Hamas leader.”
Following the death of Yahya Sinwar, the leader of Hamas and a key figure behind the October 7 attacks, Binyamin Netanyahu, the Israeli prime minister, has said they will continue military operations until all hostages taken are freed. In the midst of such turmoil investors have flocked to the stability of gold.
Meanwhile, US equities hit record highs yesterday, “meaning the diversification story continues to play out”, Newman added.
The measured pace of net selling overall shows that investors remain confident in gold’s long-term outlook, according to the online market BullionVault. It added that a switch to falling interest rates on cash is boosting the uptrend in gold prices.
“That’s also boosting new interest in buying gold. October so far is seeing the strongest pace of new account openings on BullionVault since Russia began its all-out invasion of Ukraine in March 2022,” a spokesman added.