New records for gold were set for a second day this week, with prices getting awfully close to the $US2,700 level for the most active December contract.
New 2024 highs were also recorded for the Aussie dollar, which nudged closer to 69 US cents in overnight trading. That strength is starting to put a cap on the Australian dollar gold price.
The drivers of Tuesday’s rise were the same as Monday’s: the expanding conflict in the Middle East and the continuing effects of last week’s 0.50% rate cut from the Federal Reserve.
Although the attempted stimulus package from China was mentioned, it soon faded from focus as traders turned their attention to currency moves and interest rates.
Treasury yields edged down. The US two-year note was last seen paying 3.544%, down 3 basis points, while the yield on the 10-year note fell 3 basis points to 3.73%.
Comex gold for December delivery was last seen up $US35, or 1.3%, at $US2,686.90 per ounce, rising from Monday’s record close of $US2,652.50.
The metal traded slightly lower after hitting a daily peak of around $US2,689.40 per ounce.
The current front-month September contract was at a record $US2,662.30 per ounce.
According to the World Gold Council, the Australian price was around $A3,858 per ounce.
The rising value of the Aussie dollar has clipped the local price of the metal. The Australian dollar was at 68.92 US cents just before 7 am Sydney time, nearing the 2024 high of 68.95 US cents after the Reserve Bank left rates unchanged on Tuesday.
The Aussie dollar has risen 2% over the past five days and is now at levels not seen since February 2023.
Gold prices have steadily increased since last Wednesday’s 50 basis point cut by the Federal Reserve, which also indicated the likelihood of a further 50 basis point cut by year-end.
However, it is the rising geopolitical tension in and around Israel, Gaza, and Lebanon that is drawing significant attention to gold.
Israeli strikes in Lebanon, targeting the Iran-backed Hezbollah militia, continued on Tuesday.
Following airstrikes on Monday that killed 558 people and injured hundreds more, reports indicated that on Tuesday, the Israeli Defence Forces were conducting strikes on Beirut, as Hezbollah continued firing missiles into northern Israel.
The US dollar lost ground, with the ICE dollar index last seen down 0.5 points to 100.55.