Gold rises further on Middle-East conflict as US dollar, bonds retreat
GOLD prices hit a more than one-week high on Tuesday (Oct 10), a day after posting sharp gains on increased market uncertainty due to the Middle East conflict as dovish remarks from top US Federal Reserve officials weighed on the US dollar and bond yields.
Spot gold rose 0.2 per cent to US$1,864.39 per ounce by 0117 GMT, earlier hitting its highest since Sep 29. US gold futures climbed 0.8 per cent to US$1,878.20.
Gold prices closed about 1.6 per cent higher on Monday, its biggest one-day jump in five months, as military clashes between Israel and Palestinian Islamist group Hamas raised fears that a wider conflict could affect oil supply from the Middle East and boosted demand for safe-haven assets such as gold.
The conflict is threatening more volatility for investors, adding to uncertainty ahead of corporate earnings season and crucial US inflation data later in the week.
Benchmark 10-year Treasuries made their sharpest rally in more than a month at the open in Tokyo.
US dollar index retreated as top Fed officials indicated on Monday that rising yields on long-term US Treasury bonds could steer the Fed from further increases in its short-term policy rate.
The remarks by Fed vice-chair Philip Jefferson and Dallas Fed president Lorie Logan caused investors to undercut the likelihood of further Fed rate increases.
Gold is traditionally seen as a safe-haven investment during times of economic uncertainty, but as it yields no interest, it tends to lose its attraction when interest rates rise.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.5 per cent to 861.81 tonnes on Monday.
Among other metals, spot silver gained 0.2 per cent to US$21.94 per ounce, platinum rose 0.4 per cent to US$889.53 and palladium climbed 1.3 per cent to US$1,154.34. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
