Gold jumps above $2,700 an ounce early Friday on haven demand from the escalating geopolitical risk in the Middle East.
Expectations of upcoming interest rate cuts, which are seen as bullish for gold, also fueled the rally. Those added to jitters over the Middle East and uncertainty over the upcoming U.S. presidential election.
Front-month gold futures rose 0.6% Thursday to settle at $2,707.50 an ounce on Comex, and the most-active December contract increased 1.2% in the first four days of the week. Bullion gained 5.2% last month after advancing 2.2% in August and increasing 5.7% in July, its biggest monthly gain since March. The metal rose 13% in 2023. The December contract is currently up $14.90 (+0.55%) an ounce to $2722.40 and the DG spot price is $2708.30.
Hezbollah said Thursday that it would escalate its conflict with Israel after the assassination of Hamas leader Yayha Sinwar. Meanwhile the U.S. presidential race remained tight, with Republican former President Donald Trump and Democratic Vice President Kamala Harris vying for support.
In economic news, U.S. retail sales exceeded expectations in September, according to data out Thursday. The figures signal that the economy remains resilient. Separately, U.S. industrial production data for last month came in lower, but the decline was attributed to hurricanes in Florida and a Boeing strike. U.S. weekly initial jobless claims for last week unexpectedly fell, also pointing to strength in the labor market.
The economic indicators, particularly on inflation and the labor market, are closely watched by the Fed when determining monetary policy.
The central bank cut interest rates by 50 basis points last month to 4.75% to 5.00%. It had kept them at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to rein in inflation. A bigger Fed rate cut would be bullish for gold, while holding rates at or near current high levels might be seen as bearish.
Most investors tracked by the CME FedWatch Tool expect the Fed to cut rates again in November, with 92.3% anticipating a 25 basis point reduction. The rest are betting on the Fed to hold rates unchanged. The central bank has two scheduled policy meetings left this year. Most investors tracked by the tool are expecting rates to end the year at 4.25% to 4.50%.
Meanwhile, the European Central Bank cut interest rates Thursday for the third time this year.
Front-month silver futures decreased 0.6% Thursday to $31.77 an ounce on Comex. The December contract was flat so far this week. Silver rallied 7.9% in September after gaining 0.7% in August and dropping 2.1% in July. It ticked up 0.2% in 2023. The December contract is currently up $0.661 (+2.08%) an ounce to $32.435 and the DG spot price is $32.37.
Spot palladium added 1.7% Thursday to $1,052.00 an ounce, and it dropped 2.1% so far this week. Palladium gained 3.2% in September after increasing 3.2% in August and decreasing 4.3% in July. Palladium plummeted 38% last year. Currently, the DG spot price is up $22.60 an ounce to $1076.50.
Spot platinum edged up 0.1% Thursday to $1,001.20 an ounce and rose 1.1% in the first four days of the week. Platinum increased 5.6% last month after sliding 5.2% in August and losing 2.1% in July. Platinum dropped 6.8% in 2023. The current DG spot price is up $12.20 an ounce to $1014.00.
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