Gold set for second weekly gain on Middle East turmoil
GOLD prices hit a three-month peak on Friday (Oct 20) and were set for a second straight weekly gain, with demand bolstered by the Middle East conflict and expectations that the Federal Reserve may be done with rate hikes.
Spot gold was steady at US$1,973.99 per ounce by 0132 GMT, after hitting its highest since Jul 20. US gold futures gained 0.3 per cent to US$1,986.10.
Israeli Defence Minister Yoav Gallant told troops gathered at the Gaza border on Thursday that they would soon see the Palestinian enclave “from inside”, suggesting an expected ground invasion with the aim of annihilating Hamas could be nearing.
Gold, often used as a safe store of value during times of political and financial uncertainty, has risen 2.2 per cent so far this week.
Fed chair Jerome Powell in remarks to the Economic Club of New York agreed “in principle” that the rise in yields was helping to further tighten financial conditions and “at the margin” might lessen the need for additional rate increases.
Higher interest rates raise the opportunity cost of holding gold, which is priced in US dollars and does not yield any interest.
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Dallas Fed president Lorie Logan said recent data and higher bond market borrowing costs give the central bank space to deliberate on its next monetary policy move.
Markets are widely expecting the Fed to keep interest rates on hold at its policy meeting next month, according to the CME FedWatch tool.
Data showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, indicating that strong job growth persisted in October, while existing home sales dropped to a 13-year low in September.
Spot silver eased 0.3 per cent to US$22.97 per ounce, platinum dipped 0.5 per cent to US$885.97 and palladium fell 0.3 per cent to US$1,109.55. REUTERS
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