Gold Prices Surge on Middle East Tensions and Fed Remarks
Gold Hits Over 1-Week High Amidst Middle East Worries
Gold prices soared to their highest level in over a week on Tuesday, propelled by increased market uncertainty due to conflict in the Middle East. The precious metal experienced sharp gains as dovish remarks from top U.S. Federal Reserve officials weighed on the dollar and bond yields.
Gold Reaches $1,865.19 per Ounce
Gold climbed to $1,865.19 per ounce, marking its highest price since September 29. It has since steadied at $1,860.21 by 0506 GMT, while U.S. gold rose 0.5% to $1,874.10.
Safe-Haven Demand Boosted by Middle East Conflict
Gold recorded its largest one-day jump in five months on Monday, rising approximately 1.6%. The surge was driven by military clashes between Israel and the Palestinian Islamist group Hamas, which heightened demand for safe-haven assets and oil.
Volatility and Uncertainty Looming for Investors
The ongoing conflict in the Middle East adds another layer of volatility for investors, adding to the uncertainty ahead of the corporate earnings season and crucial U.S. inflation data this week.
Rebound from Oversold Conditions
Kyle Rodda, financial market analyst at Capital.com, stated that the events in the Middle East have provided a catalyst for gold to rebound from oversold conditions. However, he believes that in the longer run, U.S. rates will be the primary driver, as high yields are unfavorable for gold.
Gold as a Safe-Haven Investment
Gold is often seen as a safe-haven investment during times of economic uncertainty. However, it tends to lose its appeal when interest rates rise due to its lack of interest yield.
Fed Remarks Impact Bond Yields
Benchmark 10-year Treasury yields retreated sharply from their 2007 highs, and the dollar eased. This came after top Fed officials indicated that rising yields on long-term bonds could deter the Fed from further increasing its short-term policy rate.
Upcoming Release of Fed Meeting Minutes
Investors are now eagerly awaiting the release of the minutes from the U.S. central bank’s September meeting, scheduled for Wednesday.
Other Precious Metals
In addition to gold, other precious metals experienced mixed movements. Spot silver fell 0.7% to $21.73 per ounce, platinum rose 0.3% to $889.05, and palladium climbed 0.6% to $1,146.37.
This story has been corrected to say U.S. ‘yields’ retreated, in the headline.
