Gold prices are significantly down on Thursday morning despite closing at a record high of $2787.04 yesterday. The price of gold is trading at $2749.42, down $38.19. The price of silver is trading at $32.72, down $1.03.
Gold’s record-breaking rally continues as investors view the upcoming US election as a major risk event that could trigger market reactions. The precious metal’s strength persists despite Middle East de-escalation, suggesting it’s increasingly seen as a hedge against election uncertainties. Gold’s price has surged 5% this month and 34% year-to-date, driven by factors such as fiscal instability concerns,safe-haven demand, geopolitical tensions, and central bank de-dollarization.
Saxo Bank reports that the options market shows a bullish sentiment towards both gold and silver, with a slight preference for silver due to its relatively cheaper price compared to gold. Silver is currently trading at about one-third below its 2011 record of USD 50. However, there is a risk of a significant correction in gold prices following the US election, potentially exceeding USD 100, depending on the outcome. Some traders are hedging against this possibility by purchasing put options, particularly at the USD 2,650 and USD 2,600 strike prices.
In the past month, gold and US Treasury yields have moved higher as the odds of a Trump win rose – Source: Bloomberg
