Safe-Haven Surge: Gold Nears $2750, Silver Approaches $35

On Wednesday (October 23rd), gold prices remained stable near historical highs due to a continuous increase in demand for safe-haven assets, with investors closely monitoring conflicts in the Middle East. As of the time of writing, the spot gold price fluctuated slightly, trading near $2,745, after reaching a session high of $2,749.07.

Geopolitical risks have become the focus of market attention, with gold prices just a few dollars below Tuesday's record high, due to the potential for the conflict between Israel and Iran to escalate into a larger-scale war. Bullish sentiment has also spread across the entire precious metals market, with silver prices approaching $35, the highest level since 2012.

Despite recent U.S. Treasury sell-offs putting pressure on the market, safe-haven demand has helped offset this impact. Traders are betting that the Federal Reserve will slow the pace of easing, which typically has a negative impact on gold prices, as higher yields and tighter monetary policy mean that gold, which does not pay interest, becomes less attractive.

"Gold prices rising despite the macro backdrop indicates that the market continues to see positive fundamental inflows," Standard Chartered analyst Suki Cooper wrote in a report. She also expects further risks of gold price increases in the coming weeks. The bank forecasts that the average gold price for the fourth quarter will reach $2,800, and the average for the first quarter of 2025 will reach $2,900.

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Israel confirmed on Tuesday that it had killed Hashem Safieddine, the heir to Hezbollah leader Hassan Nasrallah, who had previously died in an Israeli attack on Iran-backed Lebanese militant organizations.

Furthermore, according to the FedWatch tool of the Chicago Mercantile Exchange (CME), there is a 91.5% chance that the Federal Reserve will cut rates by 25 basis points at its meeting on November 7th.

Meanwhile, the International Monetary Fund stated on Tuesday that the U.S. economy will continue to provide most of the momentum for global economic growth for the remainder of this year and into 2025.

Gold is seen as a hedge against geopolitical and economic uncertainty. Gold prices have risen about one-third this year, repeatedly setting new highs, especially driven by the Federal Reserve's shift towards rate cuts in the past few months. Hedge funds have recently increased their net long positions in gold, and investors have also increased their holdings in gold exchange-traded funds (ETFs), further driving up gold prices.