In a slight retreat after inching closer to the $2,000 threshold in the previous session, gold, often considered a safe-haven asset, adjusted its course on Monday as market participants anticipated further developments in the Middle East conflict and awaited key U.S. economic data.
At 1:41 p.m. Eastern Time (1741 GMT), the price of spot gold dipped by 0.3% to settle at $1,976.19 per ounce. Concurrently, U.S. gold futures concluded the day 0.3% lower, closing at $1,987.80.
David Meger, the Director of Metals Trading at High Ridge Futures, commented on the market dynamics, saying, “Safe-haven demand will continue to drive gold higher after a slight period of consolidation. We believe geopolitical tensions and the uncertainty in the Middle East will continue to drive prices higher.”
Over the past two weeks, bullion had experienced a notable surge of approximately 9%. This upward momentum can be attributed to investors seeking refuge against the risk of an escalation in the Israel-Hamas conflict.
However, Craig Erlam, Senior Markets Analyst at OANDA, noted, “While not a negative signal, it is a red flag, and that momentum (in gold) that previously existed has not been restored in early trade this week, which could lead to some profit-taking.”
The upcoming focus in the market is the U.S. PCE (Personal Consumption Expenditures) price index, set to be released on Friday. This index is regarded as the Federal Reserve’s preferred measure of inflation. Additionally, market participants are eagerly awaiting U.S. GDP figures for the third quarter, scheduled for release on Thursday.
Meger further explained, “If inflation data come in higher than expected, it will raise concerns about rising interest rates, to which gold might see a knee-jerk reaction to the downside, but safe-haven demand should begin to kick in post that.”
Meanwhile, silver prices experienced a 1.3% decline, settling at $23.05 per ounce, while platinum exhibited a modest increase of 0.3%, reaching $897.58. Palladium, on the other hand, saw a substantial gain of 3%, closing at $1,131.03.
Heraeus analysts noted that “Sluggish battery-powered electric vehicle (BEV) sales growth and an increase in palladium-containing light vehicles this year is expected to contribute to a slight improvement in Chinese palladium autocatalyst demand this year.”
