The escalating gold price is likely partly attributable to the United States' increasingly unstable public finances, as global investors doubt the creditworthiness of the issuer of the US dollar, the world's reserve currency, according to analysts.

"Neither the Republican nor the Democratic party is making genuine efforts to address the alarming growth of the US national debt. Harris' recent policy proposals could add to the debt unless offsetting tax revenues are generated. Trump's substantial tax cuts and Biden's extensive fiscal spending have pushed the US national debt to 122 percent of GDP. US finances are set to deteriorate further during the next recession, as spending increases to mitigate economic downturns while tax revenues decline. If the US government cannot manage its debt, inflation and negative 'real rates' are the only means to reduce debt. This scenario favors hard assets like gold in the long term," said John Hardy, Head of FX Strategy at Saxo Bank, in a note.

Gold prices softened on Wednesday as the dollar's decline paused, with investors anticipating the release of the US Federal Reserve's latest policy meeting minutes for hints on interest rate cuts. Spot gold fell 0.5 percent to $2,501.79 per ounce as of 1343 GMT, after reaching a record high of $2,531.60 on Tuesday, reported Reuters. US gold futures dropped 0.4 percent to $2,539.70. "We're experiencing a temporary pause due to some mild profit-taking pressure from short-term futures traders, with the market waiting for the FOMC minutes," said Jim Wycoff, senior analyst at Kitco Metals.

ANZ analysts predict gold prices will reach new highs of $2,550/oz later this year. The SPDR Gold Shares, the most traded gold bullion ETF, tracked the gold price to new all-time highs this week, surpassing $2,500 per troy ounce for the first time. The gold price this year has risen over 21 percent compared to 17.6 percent for the US S&P 500 index. Note that the VanEck Gold Miners UCITS ETF (GDX - in grey), a popular ETF for gold miners, has also risen but has not reached all-time highs, possibly due to challenges in mine yields, forward selling by miners, and rising extraction costs, according to Saxo Bank data.

It is challenging to attribute market developments solely to US election outcomes at this stage, Hardy noted. "There was a surge in market activity around the time of the assassination attempt on Trump, which could be linked to increased chances of his victory following the event. This included a sudden rise in cryptocurrencies, which Trump has strongly supported, and a surge in small-cap stocks and financial stocks like large banks. Financials rallied as the market knows that Trump favors general deregulation. The market likely also remembered the surge in small-cap stocks when he was elected president in 2016 due to his promise of significant corporate tax cuts that he delivered in 2017," he added.— With inputs from Reuters