Key Points
- Gold prices hit a record high of $2,766.7 as uncertainty around the Fed and U.S. election boosted demand for safe-haven assets.
- The U.S. dollar strengthened, pushing the yen to 150 per dollar and the euro to $1.0792.
- Investors are cautious ahead of the U.S. presidential election, with rising odds for a Trump victory potentially supporting a stronger dollar.
- U.S. Treasury yields reached a three-month high, with markets pricing in a slower pace of Fed rate cuts.
Gold prices surged to a record high on Wednesday, while the U.S. dollar strengthened, putting pressure on the yen and the euro. Meanwhile, Asian stocks saw modest gains as investors remained cautious ahead of the upcoming U.S. presidential election, which is expected to bring volatility to global markets.
The U.S. dollar hit multi-month highs against major currencies such as the yen, euro, and sterling. The dollar’s rally has been fueled by rising U.S. Treasury yields, which reached a three-month peak as investors reassessed the pace of the Federal Reserve’s rate cuts. Traders now expect the Fed to take a measured approach to easing monetary policy, tempering previous expectations of aggressive rate cuts.
In Japan, the yen slipped back to 150 per dollar levels, prompting verbal warnings from Japanese officials. Similarly, the euro declined to $1.0792, marking its lowest since early August.
Investor attention is increasingly focused on the U.S. presidential election, which is less than two weeks away. President Donald Trump’s improving odds against Democratic candidate Kamala Harris have raised concerns about inflation, as his policies—particularly on tariffs and immigration—are expected to drive up prices. This possibility has bolstered the dollar, as traders expect U.S. interest rates to remain higher for longer.
As uncertainty around the election persists, markets are bracing for heightened volatility. U.S. Treasury yields rose, with the 10-year yield reaching 4.234%, its highest in three months. Analysts predict the Fed will take a cautious approach to rate cuts, with traders pricing in 41 basis points of reductions for 2024 and 100 bps for 2025. The Fed is expected to lower rates by 25 basis points in its next meeting, following a 50 bps cut in September.
Gold prices soared to a record high of $2,766.7 per ounce as investors sought safe-haven assets amid geopolitical tensions in the Middle East and uncertainty surrounding the Fed’s future moves. This increase highlights the market’s risk-averse sentiment as the election draws near.
Meanwhile, crude oil prices slipped slightly after strong gains earlier in the week. At 3:43 AM ET (7:43 AM GMT), Brent crude futures fell by 0.68% to $75.52 per barrel, while West Texas Intermediate futures eased 0.77% to $71.19 per barrel.
