Gold prices experienced an upward surge on Friday, coming close to the significant threshold of $2,000 per ounce. This surge was driven by reports of U.S. military actions targeting Iran-linked facilities in Syria, which reignited a strong demand for safe-haven assets.
The strikes, directed at two facilities in Eastern Syria, were declared by the Pentagon as a response to recent attacks on U.S. troops in both Iraq and Syria. The Pentagon also noted an increase in attacks on U.S. troops since the beginning of the Israel-Hamas conflict earlier in the month.
This development has raised concerns about the potential for a wider escalation in the Middle Eastern conflict, which could potentially involve more Arab nations. In response to these rising tensions, investors have sought refuge in traditional safe-haven assets, including gold.
Throughout this month, concerns over a possible escalation in the Israel-Hamas conflict have played a significant role in driving up the price of gold. In fact, the yellow metal reached an over five-month high earlier in October.
Spot gold registered a 0.2% increase, reaching $1,989.49 per ounce, while gold futures, set to expire in December, saw a 0.1% increase, bringing the price to $1,999.0 per ounce at 00:47 ET (04:47 GMT). Both of these instruments closed the week with marginal gains.
Fed Meeting and Inflation Data in Focus
Despite the rise in gold prices, further gains were somewhat restrained by the strength of the U.S. dollar and Treasury yields. The market’s focus is currently on the upcoming Federal Reserve meeting.
While it is widely anticipated that the central bank will maintain steady interest rates, it is also expected to reaffirm its commitment to keeping rates at elevated levels for an extended period.
Before the Fed meeting, investors are closely watching the release of the Personal Consumption Expenditures Index, which is the Fed’s preferred inflation gauge, due later on Friday. Any indications of persistent U.S. inflation could provide additional support for the Fed’s intention to keep rates higher. However, such a scenario may not bode well for non-yielding assets like gold.
The U.S. economy has shown signs of resilience, with stronger-than-expected Gross Domestic Product (GDP) data for the third quarter. This economic strength provides the Federal Reserve with more room to keep interest rates at higher levels.
On Friday, the U.S. dollar stabilized and was on track to record a 0.4% increase for the week.
Copper Prices on the Rise as Chinese Economic Trends Improve
In the realm of industrial metals, copper prices observed a modest increase on Friday, continuing their recovery from over five-month lows. This positive trend comes as data indicates some improvement in the Chinese economy.
Copper futures rose by 0.3% to reach $3.6022 per pound, and they also marked a weekly gain of 1.1%.
Data released on Friday revealed a marginal improvement in China’s industrial profits in the year up to September, following an 11% decline in the preceding year up to August.
Copper prices were further boosted by better-than-expected data on U.S. GDP for the third quarter, adding to the positive sentiment in the industrial metals market.
