Gold prices are rising to all-time highs, US debt is rising and election uncertainty is rising

Gold prices The US dollar hit new record highs this week amid uncertainty over the upcoming election and rising US national debt.

Gold futures prices have risen over 32% year-to-date and more than 38% over the past year, hitting a series of new all-time highs.

Gold hit new records of $2,738 on Monday and $2,760 on Tuesday before giving back some of those gains to close at $2,749 on Thursday.

Investors have turned to gold over the past year as a safe haven from various geopolitical risks, including ongoing conflicts in the Middle East and Ukraine. Uncertainty about the direction of US economic policy after the election as well as the Fed's interest rate cutting plans and long-term development growing national debt have also strengthened investments in gold.

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“What we're really seeing is that gold continues to be viewed as an essential hedge against inflationary pressures, along with safe-haven demand and cash inflows, gold remains extremely well supported,” said David Meger, director of metals trading at High Ridge Futures .

“Uncertainty leads to the US election is an additional support for the gold market given the uncertainty the market may be feeling ahead of the election,”

ANZ said in a note: “Concerns about the rising outlook for US government debt strengthen the investment case for gold.”

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The federal government's budget deficit widened to $1.8 trillion in fiscal year 2024 and is expected to continue to grow in the coming years. (istock / iStock)

That of the federal government Budget deficit topped $1.8 trillion in fiscal 2024, which ended in late September. That equaled the third-largest budget deficit in history, trailing only the deficits for fiscal years 2020 and 2021, which came amid increased federal spending due to the COVID pandemic and related economic disruptions.

Deficits are projected to continue rising in the coming years, with the nonpartisan Congressional Budget Office (CBO) forecasting annual budget deficits to exceed $2 trillion per year starting in fiscal year 2030 and reaching nearly $2 trillion just four years later. will be 9 trillion US dollars.

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Both Vice President Harris and former President Trump have released economic plans that are expected to lead to this expand the deficit progress faster over the next decade than would be the case under the CBO forecast. The CBO base case has projected that the debt-to-GDP ratio, which compares what the public owes to the size of the U.S. economy, will break a record set in 1946 during the president's next four-year term.

Continued federal spending and deficits as well as the Federal Reserve The plan to combat stubborn inflation has caused yields on another safe haven for investors, U.S. Treasury bonds, to rise, despite expectations that the central bank will cut rates again in November.

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Bob Haberkorn, senior market strategist at RJO Futures, said in a Reuters report on Wednesday that while gold “will have a hard time moving higher given where yields are headed,” he added that gold already has This year could reach $2,800 an ounce by the end of this week due to safe-haven demand.

Reuters contributed to this report.