Gold surged to a new all-time high of $2,740/oz, reflecting heightened demand by genuine buyers who are actively building positions, signaling confidence in gold’s value preservation over time.

The metal’s appeal lies in its ability to provide stability in a relativity fluid macroeconomic environment. With the U.S. election on the horizon, investors are preparing for potential market shifts, which could sustain gold’s upward momentum.

Regardless of the election outcome, expanded fiscal spending appears unavoidable. A red sweep could prioritize defense spending and traditional energy investments while a blue sweep may bring more expansive social programs and green energy investments.

Both scenarios point toward fiscal expansion, which may pressure the U.S. dollar over time, thereby enhancing the appeal of gold.

As Asian currencies remain sensitive to dollar movements, we could see increased demand for gold from these markets as investors seek value protection amidst currency fluctuations.

Gold’s strong rally could extend further toward $2,800-$2,900/oz in the coming months, especially if geopolitical risks persist or market participants anticipate slower monetary tightening.

However, periods of consolidation might occur, especially if higher bond yields temporarily reduce gold’s allure.

Still, buying interest seems well-established, with many investors adopting an accumulate-on-dips approach. If volatility remains elevated and fiscal policies continue expanding, gold’s role as a long-term store of value may solidify further, potentially paving the way for new highs.

Written by Ahmad Assiri Research Strategist at Pepperstone

By Rania Gule Senior Market Analyst

Gold prices dropped sharply yesterday, starting Wednesday’s trading at $2,617 after a strong U.S. jobs report boosted expectations that the Federal Reserve may slow down its rate cuts.

negatively impacted gold, which offered no yield. Additionally, news reports suggesting support from parties in the Middle East conflict for efforts to achieve a ceasefire prompted investors to take profits.

The prospects of easing tensions shifted capital from safe-haven assets like gold to higher-risk assets such as stocks.

At the same time, gold is facing additional pressure from rising U.S. Treasury yields, which remained above 4% following the strong non-farm payroll report. I expect that any reduction in geopolitical tensions will lead to continued selling of gold, especially if U.S. stocks keep gaining amid improved market sentiment.

As investors await U.S. inflation data and the Federal Reserve’s meeting minutes, any further hints about policy stability could push gold prices even lower, particularly if the Fed takes a more cautious approach to rate cuts.

The yellow metal has declined for six consecutive days and remains below the key support level of $2,630. In my view, gold is influenced by several fundamental factors, including the strength of the U.S. dollar, investor expectations of upcoming monetary policy decisions from the Federal Reserve, and recent geopolitical developments.

With the market waiting for the Federal Open Market Committee (FOMC) minutes and U.S. inflation figures, the main question remains: which direction will gold prices take in the coming period?

I believe many traders are preferring to wait before making significant decisions on gold until the release of the Fed minutes.

The minutes are expected to provide a clearer view of the likely path for rate cuts in the U.S. Inflation numbers due in the coming days could also be critical, as their impact will closely align with the Fed’s stance on rate reductions.

Historically, gold prices tend to move inversely to the U.S. dollar; rate cuts usually weaken the dollar and increase demand for gold as a safe-haven asset.

Currently, the U.S. dollar index (DXY) is near a seven-week high, adding pressure on gold prices.

A stronger dollar reinforces the view that the Federal Reserve may not be in a hurry to make significant rate cuts, especially as expectations of a large reduction at the upcoming November meeting have eased.

This scenario, along with a potential ceasefire in the Middle East, has reduced gold’s short-term appeal as a haven.

From an economic and fundamental perspective, it is expected that the Federal Reserve will gradually slow the pace of rate cuts.

Investors are factoring in over an 85% chance that the Fed will cut rates by 25 basis points at the November meeting. If that happens, we might see stability or even a rebound in gold prices, especially if economic conditions remain weak and inflation continues to gradually decline.

Many Federal Reserve officials have recently stated that the current monetary policy aims to control inflation without harming economic growth, which may limit gold’s short-term rise. In my opinion, U.S. Treasury yields play a key role in influencing gold.

The yield on 10-year bonds has surpassed 4%, increasing the pressure on non-yielding gold. When yields are high, investors prefer to hold assets that provide direct returns, such as bonds, over non-yielding assets like gold.

On the geopolitical front, recent reports of a possible ceasefire in the Middle East have provided some relative easing of tensions in the region. While geopolitical conflicts usually support gold as a haven, any positive developments in this area could contribute to further pressure on the yellow metal.

In my view, gold remains in an unstable position for now, as investors closely watch the FOMC minutes and upcoming inflation data. These events could be pivotal in determining gold’s direction in the coming weeks. Despite the current pressures, any indication of easing inflation or U.S. monetary policy could provide new support for gold.

However, the biggest challenge remains how gold will cope with a strong dollar and high bond yields. Therefore, expectations are tied to upcoming economic and geopolitical developments.

The Ministry of Solid Minerals Development has concluded its first commercial transaction under the National Gold Purchase Program (NGPP), bolstering the nation’s foreign reserves by $5 million.

Minister of Solid Minerals Development, Dele Alake, announced the successful sale of over 70 kilograms of gold, refined to meet the stringent London Bullion Market Association Good Delivery Standard.

Speaking at the presentation ceremony, Alake emphasized the economic significance of the transaction, stating that it injects approximately NGN 6 billion into the rural economy.

He lauded President Tinubu for his unwavering support for reforms in the solid minerals sector, highlighting the pivotal role of the NGPP in enhancing Nigeria’s foreign reserves and bolstering the value of the Naira.

“This transaction represents a strategic move to use the Nigerian Naira to acquire a liquid asset denominated in United States Dollars, demonstrating a viable strategy for fiscal and monetary stability,” Alake stated.

He further expressed confidence in the NGPP’s ability to contribute to Nigeria’s economic diversification agenda, fostering greater economic confidence and attracting foreign investment.

Executive Secretary of the Solid Minerals Development Fund, Fatima Shinkafi, explained that adherence to the London Bullion Market Good Delivery Standard ensures that Nigeria’s gold exports meet global trading requirements.

She emphasized that only gold bars meeting these standards are acceptable in the settlement of Loco London contracts, reinforcing Nigeria’s credibility in the global gold market.

President Tinubu, upon receiving a symbolic gold bar, commended the Ministry for achieving a crucial milestone in the nation’s economic diversification efforts.

He described the transaction as a concrete step towards realizing the objectives of the Renewed Hope Agenda, aimed at reducing economic dependence on oil and gas revenues.

Through initiatives like the NGPP, Nigeria aims to further enhance its gold reserves, promote economic stability, and create an environment conducive to sustainable economic growth.

The successful completion of the first commercial gold transaction marks a pivotal moment in Nigeria’s journey towards becoming a key player in the global gold market, driving economic prosperity and resilience.

The Ministry of Solid Minerals Development continues to advocate for supportive policies and regulatory frameworks that promote transparency, efficiency, and sustainability in the mining sector, laying the groundwork for future economic growth and development.

As Nigeria moves forward with its gold refining and export initiatives, stakeholders anticipate continued progress in diversifying revenue streams and strengthening the nation’s economic resilience on the global stage.