Gold price continues record run amid geopolitical tensions

The price of gold has extended its fierce rally and hit a fresh high as investors flocked to the safe haven asset amid expectations of further interest rate cuts from central banks, uncertainty over the US election result and tensions in the Middle East.
Bullion rose to a record of almost $2,733 a troy ounce after breaking through the $2,700 mark on Friday. That has taken the one-year gain in the precious metal to almost 40 per cent, making it one of the best performing asset classes of the past 12 months.
The rise has been driven by expectations of a gradual fall in interest rates, with investors pricing in a 99 per cent chance of a rate cut by the Federal Reserve at its next meeting in November. Lower rates increase the relative appeal of gold, which offers no yield to investors.
The European Central Bank reduced its key deposit rate to 3.25 per cent, from 3.5 per cent, on Friday, marking its first back-to-back interest rate reduction in more than a decade. The move came after a range of data reinforced concerns that the bloc’s largest economies are struggling.
China has also cut its benchmark lending rates as part of a package of stimulus measures to revive the economy.
There is also investor uncertainty about the outcome of the US presidential election on November 5. In a hotly contested race, Kamala Harris is only slightly ahead of Donald Trump in the polls.
Tensions in the Middle East are still fraught, with Iran claiming that it has warned the United Nations about threats from Israel to its nuclear sites. Israel has vowed to retaliate against Iran for a series of missile attacks on October 1.
Gold is seen as a store of value in times of economic and geopolitical uncertainty. The price of the precious metal has also been inflated by an increase in buying among central banks, keen to diversify their reserves for financial or strategic reasons. Global central banks increased purchases for their reserves by 6 per cent to 183 tonnes in the second quarter of this year, according to the World Gold Council.