Gold Near Record Highs as Safe-Haven Demand Soars

Gold prices edged higher on Tuesday, holding just below Monday’s record high of $2,740.00. Investors are displaying cautious optimism, as trading remains within a tight range, signaling potential volatility ahead. A breakout above $2,740.00 could signal continued upward momentum, while a dip below $2,714.23 might trigger a near-term correction. The metal’s strong uptrend continues, but concerns are emerging as prices move further away from the 50-day moving average, which is currently at $2,583.25, having supported the rally since July.

Daily Gold (XAU/USD)

At 11:08 GMT, XAU/USD is trading $2738.41, up $18.73 or +0.69%.

Safe-Haven Demand Keeps Gold Elevated

Concerns over global geopolitical tensions, uncertainties surrounding the U.S. elections, and prospects of central banks lowering interest rates are driving safe-haven demand for gold. The precious metal hit an all-time high of $2,740.37 on Monday and has risen over 32% year-to-date. Despite a stronger U.S. dollar and rising Treasury yields, which would typically pressure gold prices, the metal’s momentum remains intact.

According to Ricardo Evangelista, senior analyst at ActivTrades, uncertainty is the driving factor, making gold a crucial refuge in traders’ portfolios. Evangelista noted, “I wouldn’t be surprised to see $2,800 being touched at some point,” attributing the demand to geopolitical instability and potential central bank rate cuts.

ETF Inflows and Strong Market Momentum

The strength of gold’s rally is further supported by sustained inflows into gold-backed exchange-traded funds (ETFs). According to the World Gold Council, global physically-backed gold ETFs saw their fifth consecutive monthly inflow in September, attracting $1.4 billion. Analysts suggest these inflows are helping to preserve gold’s upside momentum, even as physical demand softens.

Han Tan, chief market analyst at Exinity Group, emphasized that gold could continue reaching new highs as long as the market overlooks the rebound in U.S. Treasury yields and the U.S. dollar. “Sustained net inflows into bullion-backed ETFs should also preserve the upside momentum in spot gold,” Tan added.

BRICS Summit and the Shift Towards Gold

The ongoing BRICS summit has highlighted the role of gold in global economic strategies, as BRICS nations seek to reduce their reliance on the U.S. dollar. With Russia and China holding significant portions of the world’s gold reserves, there is growing speculation that the BRICS bloc might consider introducing a gold-backed currency. Such a move could further support gold demand, especially as BRICS members increasingly bypass the dollar in trade.

Russia and China together control substantial reserves, with Russia alone holding 8.1% of global gold reserves. This vast accumulation suggests that gold may play a central role in the BRICS nations’ quest for economic independence.

Market Forecast: Bullish Outlook

Gold prices are poised for further gains as safe-haven demand remains strong amid global uncertainties. With the possibility of central bank rate cuts, geopolitical tensions, and the growing focus on gold from BRICS nations, the market outlook remains bullish.

Prices could challenge the $2,800 mark in the near term, especially if ETF inflows continue and geopolitical tensions escalate. Traders should watch for key levels at $2,740.00 and $2,714.23 as potential signals for further volatility.