Gold prices are on track for a third consecutive weekly gain, driven by persistent geopolitical tensions in the Middle East and expectations of sustained higher U.S. interest rates.
As of 0555 GMT, spot gold saw a 0.2% rise, reaching $1,987.78 per ounce, while U.S. gold futures remained steady at $1,997.80.
Kyle Rodda, a financial market analyst at Capital.com, highlighted the significance of the Israel-Hamas conflict in shaping gold prices, stating, “Gold prices will be a function of the Israel-Hamas conflict for as long as things are at risk of escalating.”
Overnight, Israeli forces launched their most extensive ground assault in Gaza during the ongoing conflict with Hamas, a move that has stirred growing anger in the Arab world over Israel’s continuous airstrikes in the besieged Palestinian territory.
Praveen Singh, Associate Vice-President at BNP Paribas’ Sharekhan, emphasized that “the yellow metal is commanding a hefty geopolitical premium” and suggested that it would require a consistent flow of concerning geopolitical developments to maintain its current levels.
Gold has witnessed an approximately 9% increase as investors sought refuge from potential consequences of the Israel-Hamas conflict, which escalated earlier in the month. However, the prevailing expectation of prolonged higher U.S. interest rates has prevented prices from breaching the $2,000 threshold last seen in May.
Investors are also closely monitoring the U.S. Personal Consumption Expenditure (PCE) price index, scheduled for release later in the day, as it provides cues for the upcoming U.S. Federal Reserve policy meeting.
Kyle Rodda noted that gold’s current position is primarily influenced by geopolitical risks, with prices diverging from the typical fundamental drivers. He added, “If it were a factor of real yields and the dollar, gold would be lower.”
On the currency front, the U.S. dollar is poised for a weekly gain, and U.S. Treasury yields have inched 0.2% higher, following data indicating that the U.S. economy experienced its most rapid expansion in nearly two years during the third quarter.
In the realm of other metals, spot silver increased by 0.3% to $22.87 per ounce, platinum rose by 0.8% to $907.17, and palladium added 0.5%, reaching $1,138.59.
