Investing.com– Gold prices hit a record high in Asian trade on Wednesday as safe haven demand was boosted by increased political uncertainty in the U.S. and Japan, as well as anticipation of more cues on interest rates. 

The yellow metal had a slow start to the week as a less severe than feared attack by Israel on Iran pushed up some hopes of easing tensions in the Middle East.

But safe haven demand remained underpinned by anticipation of a tight 2024 presidential election, with voting set for November 5. Japan also added to the political uncertainty after a coalition led by the ruling Liberal Democratic Party lost its parliamentary majority in a recent election.

rose 0.3% to a record high of $2,779.81 an ounce, while expiring in December rose 0.3% to $2,791.90 an ounce. 

Election uncertainty mounts, gold demand upbeat 

Markets were largely on edge before the presidential election in November, with Donald Trump and Kamala Harris locked in a tight race. 

Recent polls and prediction markets showed Trump gaining a slight edge, although analysts still saw the race as too close to call. 

Trump and Harris have proposed wildly differing plans for the U.S. economy, sparking further uncertainty over policy in the coming years.

Political uncertainty in Japan also presented an added layer to safe haven demand, after the LDP’s election loss presented a fractured outlook for the country. 

The LDP will now have to seek alliances with smaller, regional parties to maintain power, potentially diluting its governance. 

Beyond elections, tensions in the Middle East also still remained in play, given that Iran still vowed retaliation for Israel’s recent strike. 

Israel also kept up its bombing and attacks on Hamas and Hezbollah, presenting limited scope for a de escalation in the conflict. 

Rate uncertainty high as econ. data, Fed meeting looms 

Markets were also on edge before a barrage of cues on the U.S. economy and interest rates in the coming days.

Third-quarter data is due on Thursday, while data- the Federal Reserve’s preferred inflation gauge- and are due on Friday.

The readings come just days before a Fed meeting, where the central bank is widely expected to by a smaller 25 basis points. But the prospect of lower U.S. interest rates still bodes well for non-yielding assets such as gold. 

Other precious metals were also boosted by safe haven demand. rose 0.2% to $1,061.60 an ounce, while rose 0.4% to $34.570 an ounce.

Among industrial metals, benchmark on the London Metal Exchange were flat at $9,560.50 a ton, and were nursing steep losses for October. 

Investing.com — Oil prices rose Wednesday, helped by positive European growth data on top of industry data showed an unexpected draw in U.S. inventories.

At 08:00 ET (12:00 GMT), rose 1.1% to $71.53 a barrel, while rose 1.2% to $68.00 a barrel.

Both contracts fell sharply this week after a less severe than feared strike by Israel against Iran helped ease some concerns over a dire escalation in the Middle East conflict.

Economic data in focus 

Helping the tone Wednesday was the release of better-than-expected third quarter growth data from the , raising hope for future economic activity in this important consuming region.

The equivalent data is due from the later in the session, and is expected to show the world’s largest economy, and energy consumer, in solid health.

data – the Federal Reserve’s preferred inflation gauge – and data, a key labor market reading, are due on Friday. 

The prints come before a next week, where the central bank is widely expected to cut rates by 25 basis points. 

In Asia, data from top oil importer China is due on Thursday. A meeting of the country’s National People’s Congress is set for next week and is expected to provide more cues on plans for increased fiscal spending. 

The is set to decide on interest rates on Thursday, amid heightened political uncertainty in the country, while the is set to meet next week.

US inventories see weekly draw – API 

Data from the showed U.S. oil inventories fell 0.57 million barrels in the past week, compared with expectations for a build of 2.3 million barrels.

The reading usually heralds a similar trend in , which is due later on Wednesday, and offered some relief to oil markets, in that it indicated supplies in the world’s biggest fuel consumer were somewhat tight. 

Still, U.S. oil demand is expected to cool in the coming months as the winter season deters travel, while sustained pressure on the economy from sticky inflation and high interest rates is also expected to weigh.

The upcoming presidential elections were also a key point of uncertainty for markets, given that they will determine U.S. policy for the next four years. Donald Trump and Kamala Harris are set for a tight race, with both candidates promising increased U.S. oil production as part of their agenda. 

(Ambar Warrick contributed to this article.)