Gold surged to a more than two-month peak on Wednesday as the escalating conflict in the Middle East triggered a rush of investors seeking refuge in the safe-haven metal.
Spot gold witnessed a remarkable 1% gain, climbing to $1,950.67 per ounce by 2:48 p.m. ET (1848 GMT), reaching its highest point since August 1. Meanwhile, U.S. gold futures settled 1.7% higher at $1,968.3.
Ryan McIntyre, senior portfolio manager at Sprott Asset Management, noted that “Gold could breach $2,000 in the near-term if there is an escalation of geopolitical conflict. Additionally, having the Fed pause rate increases or hint at a lower probability of increases in the future would be viewed positively.” Gold is a recognized safe store of value, especially during times of political and financial uncertainty, and it has already seen an impressive climb of more than 5% in October, while Wall Street’s main stock indexes have faced a dip due to risk aversion.
Jim Wyckoff, a senior analyst at Kitco Metals, highlighted that “Gold will pull back if the Middle East situation simmers down, but right now the market place is expecting a further escalation.” The conflict led to a tragic incident where about 500 Palestinians lost their lives in a blast at a Gaza City hospital on Tuesday.
However, some analysts remain cautious, as Fawad Razaqzada, a market analyst at City Index, pointed out that with the dollar maintaining its bullish trend and bond yields on the rise again, it wouldn’t take much to push gold back down.
All eyes are also on Federal Reserve Chair Jerome Powell’s speech scheduled for Thursday, as it could provide some clarity on the Fed’s interest rate path. This comes after recent dovish comments from several U.S. policymakers.
Ole Hansen, head of commodity strategy at Saxo Bank, noted that asset managers, many of whom trade gold through exchange-traded funds (ETFs), are keeping a close eye on U.S. economic strength, rising bond yields, and the potential for another delay in peak rates.
In the precious metals market, spot silver rose 0.2% to $22.87, while platinum experienced a 1.4% decline, settling at $884.89, and palladium fell 1% to $1,132.61.
