Gold broke above $2,700 per ounce (/oz) for the first time amid concerns over escalating tensions in the Middle East and ahead of the US election, global investment bank unit ING Economics said.

Traders are seeking safety in gold after Israel said it killed Hamas leader Yahya Sinwar, and Prime Minister Benjamin Netanyahu said Israel would keep fighting until all the hostages seized by Hamas last year are free, even though US President Joe Biden said it was time for the war to end.

Combined with safe-haven demand amid an escalation of tensions in the Middle East and the ongoing war in Ukraine will drive gold to new highs.

“Gold is one of this year’s strongest performing commodities, with gains of more than 30 percent so far, supported by rate-cut optimism, strong central bank buying and robust Asian purchases,” it noted.

The report added the safe-haven demand amid heightened geopolitical risks as well as uncertainty ahead of the US election in November have also supported gold’s record-breaking rally.

No stopping climb

The US presidential election in November will also continue to add to gold’s upward momentum through to the end of the year, in our view, and is likely to perform well regardless of the election outcome. Central banks are also expected to keep adding to their holdings, which should offer support.

The National Bureau of Statistics (NBS) numbers released this morning show that Chinese monthly primary aluminum production rose 1.2 percent year-on-year to 3.65 mt as more smelters brought back the idled capacity.

Ample power supplies in the country could result in further gains in production through the rest of the year.

Cumulatively, output increased 4.6 percent from a year ago to 32.6 metric tons (MT) over the first nine months.

Among other metals, monthly crude steel production fell 6 percent year-on-year (YoY) to 77.1 MT last month (the lowest monthly total this year) as mill margins continue to remain weak, while real estate demand also remains sluggish.

Cumulative output fell 3.6 percent YoY to 768.5mt in the year until September.

Chinese Customs data showed that China’s imports of unwrought aluminum and products fell 20 percent YoY to 270 kt in September, while cumulative shipments increased 39.5 percent to 2.85 MT in the first nine months. In the US, Henry Hub natural gas ended lower yesterday for a second consecutive session as the US natural gas storage data remained somewhat bearish while milder weather continues to dampen the demand expectations.

EIA weekly data shows that US gas storage increased by 76Bcf last week, slightly less than the 77.6Bcf increase the market was expecting. Meanwhile, this was below the five-year average increase of 80Bcf.

Total gas stockpiles totaled 3,705Bcf as of 11 October, up almost 3 percent from the same period last year and 4.6 percent above the five-year average.