Gold prices have hit record highs 36 times this year. Is the universe the limit for gold?

On October 18th, with an unstoppable momentum, the price of spot gold broke through the $2,700 mark for the first time.

This year, gold has surged by over 33%, continuously setting new records during this upward trend, hitting all-time highs 36 times so far this year.

In the current extreme gold market, it seems any news is interpreted as bullish.

What’s driving gold’s unstoppable rally?

First, the timeless adage 'buy gold in troubled times' remains as relevant as ever.

This year, prolonged international conflicts—such as Russia-Ukraine and the Middle East—show no signs of easing, while new tensions emerge on the Korean Peninsula. This keeps gold’s appeal as a safe-haven asset at peak levels.

Second, the global wave of interest rate cuts has fueled sustained buying in gold.

The Federal Reserve kicked off its rate-cut cycle with a 50-basis-point reduction, and the European Central Bank followed suit on October 17th, cutting its three key rates by 25 basis points.

Most major economies, except Japan, are now in a rate-cutting cycle, providing strong and continuous demand for gold—a key driver behind its record-breaking rally.

Gold’s rally last year was largely driven by central banks’ aggressive purchases, though this factor has weakened in 2024, now playing a secondary role.

Finally,

the U.S. economy remains the most closely tied to gold prices, and the upcoming election has further highlighted gold’s leading attributes.

Market narratives have shifted from Q3’s 'rate-cut trade' to the 'Trump trade.'

According to the latest betting odds, Trump has a 60% chance of winning, with rising probabilities of a Republican sweep in Congress.

That said, the U.S. election isn’t uniformly bullish for gold—it depends on the context.

In 2016, a Republican sweep was positive for stocks and petrodollars but unfavorable for bonds and gold.

This time, however, gold is poised to defy expectations, as neither presidential candidate nor party has a viable plan to address the U.S.’s $35 trillion fiscal deficit.

This massive deficit has eroded the safety appeal of U.S. Treasuries, another traditional safe-haven asset.

With investors still facing inflation and a weakening dollar, gold’s attractiveness as an alternative safe-haven has surged significantly.

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Gold has now reached an unprecedented high above $2,700. As a safe-haven asset, its frenzy has exceeded most expectations—but has its role as a hedge weakened or even turned into a risk asset at this price?

If international conflicts don’t escalate further, their impact may gradually fade.

However, major economies in a rate-cutting cycle can’t quickly reverse their monetary policies, so gold’s medium-to-long-term bullish thesis remains intact.

Additionally, both U.S. presidential candidates’ policies involve expanding fiscal deficits—only the scale differs. In this environment, gold’s appeal grows daily. Major international banks, including those in the U.S. and UK, have raised their 6–12 month gold price targets to $3,000.

All signs point to gold’s strength continuing, but markets are volatile. Investors must stay agile to navigate unexpected events!

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