The gold market is in “crisis mode” despite a stronger US dollar and rising real US bond yields, according to Carsten Menke, Head Next Generation Research, Julius Baer.

“For gold, this is something that typically only happens in times of extreme economic or systemic stress, e.g. during the Great Financial Crisis or the Eurozone Crisis,” he said.

Gold surged to an all-time high of $2,784.82 per ounce on Wednesday morning, with the Swiss private bank attributing the rally primarily to bullish sentiment and the upcoming US presidential election. 

Global gold demand increased by 5% year-on-year in the third quarter, driven by over-the-counter (OTC) and investment demand. However, jewellery demand and central bank purchases remained the weakest segments.

However, the extreme euphoria in the markets makes prices susceptible to a short-term but temporary setback, which will likely be treated as a longer-term buying opportunity, Manke warned. 

Meanwhile, total gold demand increased 5% year-on-year to 1,313 tonnes, a record third quarter, said Louise Street, Senior Markets Analyst at the World Gold Council.

She said that total demand exceeded $100 billion for the first time on record, supported by strong investment in a record-high price environment, adding a “FOMO factor” among investors has been a key driver of increased demand this quarter. 

“Investors have shown an appetite to buy into the price momentum and are considering gold’s role as a safe haven in the face of US political uncertainty and escalating conflicts in the Middle East,” Street said.

(Editing by Seban Scaria seban.scaria@lseg.com)