Gold spot price is approaching $2,800, climbing to a historic high of $2,782.2 per ounce before the deadline, with a year-to-date increase of over 37%, higher than the 22% increase of the S&P 500 index. The main factors driving the rise in gold prices include the US presidential election, war hedging, expected interest rate cuts, and central bank's increased gold reserves.

Gold spot price continues to break new highs, approaching the $2,800 mark before the deadline. According to TradingView data, the gold spot price has climbed to a historic high of $2,782.2 per ounce, currently trading at $2,778.2 per ounce, with a 1.18% increase yesterday, a year-to-date increase of 37.4%, surpassing the 22% increase of the S&P 500 index, making it one of the standout assets this year.

Multiple factors support the gold price.

Gold prices have been steadily rising recently. Ole Hansen, commodity strategist at Saxo Bank, pointed out that the main driving factors include: financial instability, rising demand for safe havens, central banks increasing gold reserves, Chinese investors turning to gold due to low savings rates and concerns about the real estate market, and increased uncertainty in the recent US presidential election. More details will be provided on each point:

1) Uncertainty in the US presidential election

The US presidential election will be held on November 5th, with the unpredictable situation in swing states increasing market instability, prompting investors to turn to gold as a hedge.Its price has soared to a historic high, closely related to market expectations of interest rate cuts by the Federal Reserve.Hansen said:

The political uncertainty in the USA is the main reason driving the rise in safe-haven demand.

In addition, Forex analyst Fawad Razaqzada also mentioned that the uncertainty of the US election has short-term support for the price of gold, which remains a classic safe-haven tool to deal with market volatility.

2) War hedge

Since October last year, conflicts have arisen between Israel and surrounding organizations or countries like Hamas, Iraq, and Lebanon in the Middle East, while the two-year-long Ukraine-Russia war has yet to end. Recently, North Korea has sent troops to support Russia, escalating the Ukraine-Russia war and pushing it towards internationalization. In response, South Korea stated that if North Korea intervenes in the Ukraine-Russia war, Seoul will consider providing weapons to Ukraine.

Against the backdrop of regional conflicts escalating towards internationalization, the safe-haven value of gold is gradually increasing.

3) Interest rate cut expectations

Market expectations of a Fed rate cut have driven the rise in gold. Currently, according to the CME Fedwatch tool, the market predicts a 99% probability of a 1-point rate cut in November, with a 1% probability of no cut. As gold itself does not yield interest, a rate cut will lower the holding of gold.opportunity costthus increasing its attractiveness to investors.

Despite the recent strength of the US dollar and the rise in long-term bond yields, theoretically weakening the attractiveness of non-yielding assets such as gold, the price of gold continues to climb. In response, Jeff Jacobson, an analyst at 22V Research, stated that this demonstrates a very strong and powerful bullish sentiment in the gold market.

Due to the fairly stable upward trend of gold, it indicates that there may still be enough room for further increases.

However, Razaqzada expressed concerns:

If yields and the US dollar maintain their current trend, the short-term prospects for gold may come under pressure, but no relevant signs have been seen so far.

4) Central banks increase gold reserves

Central banks globally significantly increase their holdings of gold, especially emerging markets that wish to reduce their dependence on the US dollar due to geopolitical tensions. This strong demand provides important support for this year's gold prices.

Analysts are concerned about the overheated market sentiment.

However, some analysts advise investors to remain cautious and avoid increasing investment risks due to excessively high market sentiment.

Senior research analyst Jay Kaeppel of SentimenTrader stated that despite multiple favorable trend signals for gold, the gold price may experience a parabolic surge similar to the late 1970s to early 1980s. In other words, gold may rise to unsustainable levels, eventually forming a bubble that bursts. Kaeppel warned:

"There is a significant possibility of a substantial pullback in gold prices in the coming weeks or months."

Rick Bensignor of Bensignor Investment Strategies shares a similar view. He recently sold about half of his gold position at a price of $2700 per ounce, warning investors not to be misled by media hype surrounding gold.

Bitcoin is less than 200 megabytes away from its previous high.

It is worth mentioning that the performance of Bitcoin, recently hailed as the "digital gold," is also impressive. Following its breakthrough of the $70,000 mark yesterday, it continues to surge towards its previous high. In the early morning today, Bitcoin peaked at $73,620, just $157 away from its historical high of $73,777, almost synchronizing with the upward trend of gold.

As of the deadline, it is now reported at $72,279, up 1.8% in the past 24 hours and nearly 8% in the past week.