Gold flirts with record highs ahead of US data

Gold rose on Thursday to hover below record levels, underpinned by uncertainty surrounding the U.S. election and expectations of more rate cuts by major central banks, while investors looked forward to a slew of U.S. data for further direction.

Spot gold rose 0.2% to $2,679.12 per ounce by 0458 GMT. Prices had climbed to a session high of $2,685.16 on Wednesday, shy of the record $2,685.42 scaled on Sept. 26.

U.S. gold futures gained 0.1% to $2,694.70.

“Investors are seeking safe-haven gold as a hedge amid uncertainty over the U.S. elections. A Trump presidency should support gold as it might raise trade tensions and widen the budget deficit,” said Kelvin Wong, OANDA’s senior market analyst for Asia Pacific.

Republican presidential candidate Donald Trump on Tuesday defended his protectionist trade policies and other fiscal proposals.

The U.S. retail sales and industrial production data for September and weekly jobless claims data are due later in the day.

“Investors will scrutinize data and if it comes below expectations, it could drive gold further up… Lower rate prospects globally are helping as they reduce the cost of holding bullion,” Wong added.

Traders see a 92% chance of a 25-basis-point rate cut by the U.S. central bank next month.

The European Central Bank is likely to lower rates again, arguing inflation in the euro zone is now increasingly under control.

British inflation slowed sharply last month, which reinforced bets on a Bank of England rate cut next month.

Lower interest rates and geopolitical tensions tend to boost bullion, which is considered a safe asset and yields no interest.

Safe-haven buying has also been driven by increasing geopolitical risks amid elevated tensions in the Middle East, said Daniel Hynes, senior commodity strategist at ANZ.

Spot silver rose 0.3% to $31.57 per ounce. Platinum firmed 1.1% to $1,004.10 and palladium fell 0.1% to $1,022.14. – Reuters