Gold prices rose on Thursday amid escalating tensions in the Middle East, enhancing the metal’s status as a safe haven. This increase comes despite the impact of persistently high U.S. interest rates. As of early trading at 0429 GMT, spot gold had increased by 0.6% to $2,374.97 per ounce, following a record high of $2,431.29 reached the previous Friday. Meanwhile, U.S. gold futures saw a modest rise of 0.1% to $2,389.70.
“Given the fact that we do have a lot of uncertainty on the geopolitical front, which is supporting this upward trend that is still prevalent in gold,” stated Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.
In the political arena, Israeli Prime Minister Benjamin Netanyahu emphasized Israel’s autonomy in self-defense, amid international calls for moderation in response to attacks from Iran.
However, Wong noted, “U.S. interest rates remaining higher for a longer may be adding some pressure to the ongoing boost for gold … In the short term, we will start to see a bit of consolidation and a potential pullback.”
The persistent high interest rates have diminished the attractiveness of non-yielding bullion. Federal Reserve officials have recently been more cautious in discussing rate cut timings, with Fed Chair Jerome Powell hinting on Tuesday that rates might remain elevated for an extended period. Futures traders are now predicting less than a 50 basis point reduction in the Fed’s rates for 2024, expecting a quarter point cut by September.
Elsewhere, European Central Bank policymaker Mario Centeno remarked, “even after 25 or 50 basis points of cuts we’ll still have a tight monetary policy stance.”
In other metals, spot silver increased by 0.6% to $28.38 per ounce. Platinum remained stable at $938.40, while palladium saw a slight uptick of 0.2% to $1,027.82 per ounce.
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