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Gold Hovers near Record High on Safe-haven Demand

FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo
FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo
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Gold Hovers near Record High on Safe-haven Demand

FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo
FILE PHOTO: Gold bullions are displayed at GoldSilver Central's office in Singapore June 19, 2017. REUTERS/Edgar Su/File Photo

Gold prices rose on Tuesday and hovered near a record high hit in the previous session amid uncertainties around the US election, ongoing Middle East tensions, and expectations of central banks' interest rate cuts.
Spot gold rose 0.4% to $2,729.91 per ounce by 0303 GMT. US gold futures rose 0.2% to $2,744.40.
Gold hit its all-time high of $2,740.37 on Monday and has gained about 32% so far this year.
"A confluence of tailwinds remains in place (for gold), which includes its status as an attractive hedge against US election uncertainties and geopolitical risks, resilient central banks’ demand and room for catch-up ETF buying," IG market strategist Yeap Jun Rong said.
"Buyers may seem to eye the $2,800 level next, as political uncertainties will persist as the election draws nearer."
With the US presidential election just over two weeks away, former President Donald Trump and Vice President Kamala Harris are caught in a knife-edge battle to win over some of the more competitive states.
Recently, Israel has assassinated the leaders of Hezbollah in Lebanon and of Hamas in Gaza, while showing no sign of reining in its ground and aerial offensives.
Elsewhere, traders now see a 91% chance of a quarter basis point cut by the Fed in November, according to the CME Fedwatch tool.
Gold's rally comes despite a firmer US dollar and yields. Benchmark 10-year Treasury yields rose to a 12-week high in the last session, while the US dollar clung to a two-and-half-month high on Tuesday.
Spot silver rose 0.5% to $33.93 per ounce after hitting its highest since late-2012 in the last session.
Citi Research revised its 6 to 12-month forecast for silver prices upward to $40 per ounce from $38 per ounce.
Platinum rose 0.3% to $1,006.35 per ounce. Palladium added 0.6% to $1,057.65.

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Oil Slumps More than 4% after Iran Downplays Israeli Strikes

Oil pump jacks work at sunset near Midland, Texas, US, August 21, 2019. REUTERS/Jessica Lutz/File Photo
Oil pump jacks work at sunset near Midland, Texas, US, August 21, 2019. REUTERS/Jessica Lutz/File Photo
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Oil Slumps More than 4% after Iran Downplays Israeli Strikes

Oil pump jacks work at sunset near Midland, Texas, US, August 21, 2019. REUTERS/Jessica Lutz/File Photo
Oil pump jacks work at sunset near Midland, Texas, US, August 21, 2019. REUTERS/Jessica Lutz/File Photo

Oil prices tumbled more than $3 a barrel on Monday after Israel's retaliatory strike on Iran over the weekend bypassed Tehran's oil and nuclear facilities and did not disrupt energy supplies, easing geopolitical tensions in the Middle East.
Both Brent and US West Texas Intermediate crude futures hit their lowest levels since Oct. 1 at the open. By 0750 GMT, Brent was at $72.92 a barrel, down $3.13, or 4.1%, while WTI slipped $3.15, or 4.4%, to $68.63 a barrel, Reuters said.
The benchmarks gained 4% last week in volatile trade as markets priced in uncertainty around the extent of Israel's response to the Iranian missile attack on Oct. 1 and the US election next month.
Scores of Israeli jets completed three waves of strikes before dawn on Saturday against missile factories and other sites near Tehran and in western Iran, in the latest exchange in the escalating conflict between the Middle Eastern rivals.
The geopolitical risk premium that had built in oil prices in anticipation of Israel's retaliatory attack came off, analysts said.
"The more limited nature of the strikes, including avoiding oil infrastructure, have raised hopes for a de-escalatory pathway, which has seen the risk premium come off a few dollars a barrel," Saul Kavonic, a Sydney-based energy analyst at MST Marquee, said.
"The market will be watching closely for confirmation Iran won't counter attack in the coming weeks, which could see the risk premium rise again."
Commonwealth Bank of Australia analyst Vivek Dhar expects market attention to turn to ceasefire talks between Israel and Iran-backed militant group Hamas that resumed over the weekend.
"Despite Israel’s choice of a low aggression response to Iran, we have doubts that Israel and Iran’s proxies (i.e. Hamas and Hezbollah) are on track for an enduring ceasefire," he said in a note.
Citi lowered its Brent price target in the next three months to $70 a barrel from $74, factoring in a lower risk premium in the near term, its analysts led by Max Layton said in a note.
Analyst Tim Evans at US-based Evans Energy said in a note: "We think this leaves the market at least somewhat undervalued, with some risk OPEC+ producers may push back the planned increase in output targets beyond December."
In October, the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, kept their oil output policy unchanged including a plan to start raising output from December. The group will meet on Dec. 1 ahead of a full meeting of OPEC+.