UBS pushes out S&P 500 mid-2024 target forecast to year-end

Oct 16 – UBS said it now expects the S&P 500 to hit 4,700 points only by December 2024, instead of the middle of the year as it forecast earlier, due to expectations of higher-for-longer US interest rates.

The brokerage, in a note dated Oct. 13, said it now expects the benchmark index to hit 4,500 points by mid-2024, which implies an increase of about 4% from current levels.

“The delay … is primarily related to the recent rapid move higher in interest rates and … expectations that interest rates will remain higher for longer,” said David Lefkowitz, head of chief investment office, US equities, UBS.

The Federal Reserve has raised the benchmark interest rate by 525 basis points since it started its aggressive battle against inflation in March last year.

The fear of higher-for-longer rates has pushed the S&P 500 down about 6% from this year’s highs hit late in July. Still, the index has clocked a 12% gain so far this year to close at 4,327.78 points on Friday.

“We still expect a soft-ish landing in the US economy, which should drive a recovery in earnings growth and close to a double-digit total return in US large-cap stocks over the coming year,” said Lefkowitz.

“While valuations are high relative to history, they are reasonable in the context of low unemployment and falling inflation.”

(Reporting by Reshma Rockie George and Susan Mathew in Bengaluru; Editing by Savio D’Souza)

Asian FX reserves slip as central banks grapple with strong dollar

SINGAPORE/MUMBAI, Oct 16 – Asia’s central banks have spent this year defending their currencies against a strong US dollar, paring foreign exchange reserves to multi-month lows in the process, yet have struggled to soothe market nerves or contain capital outflows.

Emerging Asia’s currencies have been highly volatile all year, hemmed between China’s defence of its yuan and a surging dollar backed by a progressively more hawkish Federal Reserve.

Analysts at J.P. Morgan estimated Asian central banks, excluding China, have sold more than USD 30 billion of reserves in the past two months to stabilise currencies.

But that intervention has done little to calm investors worried about diminishing returns in emerging markets as dollar yields rise and currencies weaken.

Official data showed a net outflow of $2.7 billion from Asian local currency bonds in August as bond markets in Malaysia, Indonesia, South Korea, India and Thailand clocked their biggest net sales since October 2022.

Foreign exchange reserves have dwindled across the region. South Korea’s reserves stood at USD 414.12 billion at September-end – the smallest amount since October 2022, while Indonesia’s reserves fell to USD 134.9 billion last month, the lowest since November.

Not all of the change can be attributed to intervention, though, as the dollar’s rise has also eroded the value of other currencies held by central banks.

“Literally everybody in Asia is now participating in the market much more,” said Brad Bechtel, global head of foreign exchange at Jefferies. “The dollar would be far higher if all these Asian central banks weren’t participating so aggressively.”

Indonesia’s rupiah was, until early this month, one of few Asian currencies to be up against the dollar but is now down about 1% for the year. The South Korean won is down more than 5%, while the Thai baht has slipped nearly 5%.

The Reserve Bank of India (RBI), Bank Indonesia and Bank of Thailand have spoken out against speculative foreign exchange trades, and over the last month stepped into the market to support their depreciating currencies.

India’s foreign exchange reserves stood at USD 584.74 billion as of Oct. 6, the lowest in more than five months.

Speaking on the sidelines of the International Monetary Fund and World Bank annual meeting in Marrakech, RBI Governor Shaktikanta Das last week said, “central banks in emerging markets were required to intervene in the currency market from time to time to prevent excessive volatility”.

While reserves have fallen, they are above levels seen in October last year and still leave central banks with ample ammunition.

But gyrating currencies and the challenge of fighting an unstoppable and forceful dollar rally have also hamstrung any hope of monetary policy easing in most of Asia this year.

Aninda Mitra, head of Asia macro and investment strategy at BNY Mellon Investment Management, said it was not a surprise that rate cuts in Asia are off the radar this year and seem to be getting pushed into 2024.

“The reality is FX intervention will tighten liquidity… That completely works against what you are trying to accomplish via a rate cut. So why even bother?”

(Reporting by Ankur Banerjee in Singapore and Jaspreet Kalra in Mumbai; Editing by Vidya Ranganathan and Christopher Cushing)

Oil prices ease as investors assess risks of Israel-Hamas war

TOKYO, Oct 16 – Oil prices slipped on Monday after surging last week, with investors waiting to see if the Israel-Hamas conflict draws in other countries – a development that would potentially drive up prices further and deal a fresh blow to the global economy.

Brent futures LCOc1 were last down 33 cents, or 0.4%, at $90.56 per barrel at 0645 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 fell 0.3% or 26 cents to USD 87.43 a barrel.

Both benchmarks climbed nearly 6% on Friday, posting their highest daily percentage gains since April, as investors priced in the possibility of a wider Middle East conflict.

For the week, Brent advanced 7.5% while WTI climbed 5.9%.

“Investors are trying to figure out the impact of the conflict while a large-scale ground assault has not begun after the 24-hour deadline that Israel first notified residents of the northern half of Gaza to flee to the south,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

“The impact that may involve oil-producing countries has been factored into the prices to some extent, but if an actual ground invasion were to occur and have an impact on oil supply, the prices could easily exceed USD 100 a barrel,” he said.

The conflict in the Middle East has had little impact on global oil and gas supplies, and Israel is not a big producer.

But the war between Islamist group Hamas and Israel poses one of the most significant geopolitical risks to oil markets since Russia’s invasion of Ukraine last year, amid concerns about any potential escalation involving Iran.

Market participants are assessing what a wider conflict might imply for supplies from countries in the world’s top oil producing region, including Saudi Arabia, Iran and the United Arab Emirates.

If Tehran is found to be directly involved in the Hamas attack, it would likely result in the U.S. fully enforcing its sanctions on Iran’s oil exports, Commonwealth Bank of Australia analyst Vivek Dhar said in a note on Monday.

“The US has turned a blind eye on its sanctions on Iran’s oil exports this year as it looked to improve diplomatic ties with Iran,” he said.

“The 0.5-1 million barrels per day increase in Iran’s oil exports this year – equivalent to 0.5-1% of global oil supply – is at risk of being sidelined if U.S. sanctions are enforced in full.”

Israel’s Prime Minister Benjamin Netanyahu vowed on Sunday to “demolish Hamas” as his troops prepared to move into the Gaza Strip in pursuit of Hamas militants whose deadly rampage through Israeli border towns shocked the world.

Iran warned on Saturday that if Israel’s “war crimes and genocide” are not stopped then the situation could spiral out of control with “far-reaching consequences.”

With fears of the conflict escalating, U.S. Secretary of State Antony Blinken will return to Israel on Monday to talk “about the way forward” after several days of shuttle diplomacy between Arab states.

The US last week imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7’s price cap of USD 60 a barrel, an effort to close loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine.

Russia is one of the world’s top crude exporters, and the tighter US scrutiny of its shipments could curtail supply.

(Reporting by Yuka Obayashi in Tokyo and Emily Chow; editing by Edwina Gibbs and Sonali Paul)

Oil falls more that USD 1 a barrel on Venezuela deal hopes

HOUSTON, Oct 16 – Oil futures fell more than USD 1 a barrel on Monday as expectations rose that the US and Venezuela could soon reach a deal easing sanctions on Venezuelan crude exports, while traders said the Israel-Hamas conflict did not appear to threaten oil supplies in the short term.

Brent crude futures settled at USD 89.65 a barrel, down USD 1.24, or 1.4%. US West Texas Intermediate crude (WTI) fell USD 1.03, or 1.2%, to finish at USD 86.66 a barrel.

Venezuela’s government and opposition will return to political negotiations this week after nearly a year, the two sides said, while sources said the US has reached a preliminary deal to ease sanctions on Venezuela’s oil industry in return for a competitive, monitored presidential election in Venezuela next year.

“The reported deal … would help to raise the country’s oil output from very depressed levels,” said William Jackson, chief emerging markets economist for Capital Economics.

“But the sector requires enormous investment to return output to the levels seen only a decade ago,” Jackson added. “And this wouldn’t materially affect the deficit in the global oil market in the near term.”

Both oil benchmarks had surged last week on fears the conflict in the Middle East could widen, with global benchmark Brent gaining 7.5% in its highest weekly gain since February.

Monday’s falling prices appeared to “a breather to take in events in the Middle East” as opposed to expected production increases in Venezuela, said Andrew Lipow, president of Lipow Oil Associates.

“Negotiations with Venezuela could lead to a surge in exports of crude oil that is already in inventory,” Lipow said. “But a surge in production is a ways off given the decrepit state of the Venezuelan energy infrastructure.”

Traders said the war between Israel and the Palestinian Islamist militant group Hamas so far remained focused in the Gaza Strip.

“It’s more of the same on Monday in terms of the conflict in the Middle East being contained from affecting crude oil supplies,” said John Kilduff, partner with Again Capital LLC.

Israeli air strikes on Gaza intensified on Monday after diplomatic efforts by the US to arrange a ceasefire in southern Gaza failed.

Russia has also entered the diplomatic fray, with President Vladimir Putin set to hold talks with Iran, Israel, Palestinians, Syria, and Egypt.

Heightened tensions in the Middle East may have compounded other risk factors to push prices higher last week, market sources said.

The US last week imposed the first sanctions on owners of tankers carrying Russian oil priced above the Group of Seven’s price cap of USD 60 a barrel, an effort to close loopholes in the mechanism designed to deprive Moscow of revenue for its energy sales.

“The sudden decision on tightening up of sanctions on ship owners carrying Russian crude over the USD 60/barrel limit by the US started to niggle and so did the Russian/Saudi meeting concluded by President Putin stating that OPEC+ were achieving ‘stability,'” said PVM analyst John Evans, referring to the price rises at the end of last week.

(Reporting by Erwin Seba in Houston; additional reporting by Robert Harvey in London, Yuka Obayashi in Tokyo and Emily Chow; Editing by Marguerita Choy and Paul Simao)

Dollar buoyed by safe-haven bids, rate jitters

SINGAPORE, Oct 16 – The dollar was on the front foot on Monday in cautious trade as tensions in the Middle East escalated, while investors awaited a speech by Federal Reserve Chair Jerome Powell later this week for further clues on the US central bank’s rate outlook.

The Israeli shekel fell to more than an eight-year low of 3.9900 per dollar in early Asia trade, after the country’s Prime Minister Benjamin Netanyahu vowed on Sunday to “demolish Hamas” as his troops prepared to move into the Gaza Strip in pursuit of Hamas militants.

Carry trades funded by the yen could be the biggest casualty of further escalation in the war, analysts said, as global investors who have for months been shorting the yen to invest in higher-yielding currencies buy it back as a safe haven.

The yen was last steady at 149.53 per dollar.

The Japanese currency, which is near potential intervention levels around 150, could also rally if the Fed has to stop hiking rates even as the Bank of Japan feels compelled by domestic inflation to tighten policy.

The BOJ has continued to maintain its ultra-easy policy settings although markets are rife with speculation that it could move to gradually exit from the accommodative stance sooner rather than later.

“Obviously war is inflationary, disrupts growth, and threatens risk assets,” James Malcolm, head of FX strategy at UBS in London.

“The largest overhang I can see in this regard is dollar-yen, where the BOJ must pivot regardless and the carry trade that has built up now amounts to nearly half a trillion dollars.”

Elsewhere, the safe-haven dollar stood near a one-week high against a basket of currencies as risk sentiment remained fragile, pinning the euro near a one-week low hit on Friday.

The single currency was last 0.11% higher at USD 1.0522.

Sterling gained 0.06% to USD 1.21515, though it was similarly languishing near Friday’s one-week trough of USD 1.2123.

“I view what’s going on in Israel as a regional conflict, which typically does not have meaningful impacts on financial markets over time,” said David Chao, Invesco’s global market strategist for Asia Pacific ex-Japan.

“I don’t see it altering growth trajectories of the major economies nor does it make the Fed more hawkish. If anything, I think the Fed is less inclined to tighten going forward given the perception of heightened risks.”

The Australian dollar, often used as a proxy for risk appetite, gained 0.19% to USD 0.6309, after sliding 1.4% last week.

On the policy front, traders looked to Fed Chair Powell’s speech before the Economic Club of New York later this week for clues on how much further US interest rates could rise, after data last week showed consumer prices increased more than expected in September.

Markets are largely expecting the Fed to keep rates on hold when it announces its next monetary policy decision in November, according to the CME FedWatch tool, though they see a roughly 32% chance the central bank could deliver a rate hike in December.

In other currencies, the New Zealand dollar gained 0.33% to USD 0.5904.

New Zealand’s center-right National Party led by Christopher Luxon will form a new government with its preferred coalition party ACT, as Prime Minister Chris Hipkins conceded his Labor Party could not form a government after Saturday’s general election.

“The kiwi dollar jumped this morning following a clear and decisive victory of New Zealand’s opposition National Party,” said Kyle Rodda, senior financial market analyst at Capital.com.

“It appears the Nationals are in the position to win power while only requiring one coalition partner, excluding the populist New Zealand First party.

“The kiwi has jumped on the prospect such dysfunction has been avoided.”

(Reporting by Rae Wee and Vidya Ranganathan; Editing by Shri Navaratnam)

Nervous markets eye Gaza as oil hovers above USD 90

TOKYO, Oct 16 – Crude oil hovered above USD 90 a barrel while equities were weak and the safe-haven dollar was firm on Monday as investors nervously watched for whether escalating violence in Gaza would cause the conflict to spread beyond Israel and Hamas.

Israel’s shekel sank to a nearly eight-year low, after the country’s prime minister, Benjamin Netanyahu, vowed to “demolish Hamas” in retaliation for the rampage on Oct. 7 that killed 1,300 people in the worst attack on civilians in Israel’s history.

US Secretary of State Antony Blinken is visiting the region, seeking to prevent further escalation. Netanyahu agreed to lift a blockade of water supplies to parts of southern Gaza after speaking with US President Joe Biden.

Brent crude futures reached a new recent high of USD 91.20 on Monday before easing back slightly to USD 90.84, following Friday’s 5.7% surge.

Japan’s Nikkei share average fell more than 1%, while Australia’s S&P/ASX 200 index lost 0.15% in early trading. New Zealand’s equity benchmark slid 0.9%.

On Friday, the pan-European STOXX 600 index lost 0.98 and New York’s S&P 500 declined 0.50%, although US stock futures pointed 0.18% higher on Monday.

“The situation is dynamic and it’s too early to say if the hedges placed on Friday are unwarranted, but there have been pockets of positive news flow,” Chris Weston, head of research at Pepperstone, wrote in a note, citing the resumption of water supplies as one example.

“Risk and energy markets will look for headlines and actions from Iranian officials who have stated they have a duty to come to the aid of the Palestinians.”

Benchmark 10-year US Treasury yields were little changed at 4.6434%, following a more than 8 basis point decline on Friday amid demand for the safety of bonds.

Currencies overall retraced some of their moves from the end of the week, with the US dollar index easing slightly to 106.55 from as high as 106.79 on Friday.

The euro rose 0.1% to USD 1.0522 while the yen was little changed at 149.505 per dollar.

However, Israel’s shekel was weaker, last trading at 3.9850 per dollar after weakening to 3.9900 earlier in the day for the first time since April 2015.

(Reporting by Kevin Buckland in Tokyo; Editing by Lincoln Feast.)

Oil prices ease as investors assess impact of Israel-Hamas war

By Yuka Obayashi

TOKYO, Oct 16 (Reuters) – Oil prices eased in early Asia trade on Monday, reversing last Friday’s rally as investors waited to see if the Israel-Hamas conflict draws in other countries, which could drive up prices further and deal a fresh blow to the global economy.

Brent futures LCOc1 fell 36 cents, or 0.4%, to $90.53 per barrel and U.S. West Texas Intermediate (WTI) crude CLc1 dropped 37 cents, or 0.4%, to $87.32 a barrel by 2215 GMT on Sunday.

Both benchmarks rose nearly 6% on Friday, posting their highest daily percentage gains since April, as investors priced in the possibility of a wider Middle East conflict.

Brent also recorded a weekly gain of 7.5%, its biggest such increase since February. WTI climbed 5.9% for the week.

The conflict in the Middle East has had little impact on global oil and gas supplies, and Israel is not a big producer.

But investors and market observers are assessing how the conflict could escalate and what it might mean for supplies from nearby countries in the world’s top oil producing region.

Inside Gaza’s narrow and crowded streets, conditions were deteriorating as deaths from Israeli air strikes rose. Bodies were stored in ice cream freezer trucks because moving them to hospitals was too risky and cemeteries were full.

With fears of the conflict spilling further, U.S. Secretary of State Antony Blinken continued his tour of Middle East states, seeking to prevent escalation and secure the release of 155 hostages Israel says were taken by Hamas back into Gaza.

(Reporting by Yuka Obayashi, editing by Deepa Babington)

((Yuka.Obayashi@thomsonreuters.com; +813-4520-1265;))

Global markets watch for fallout as Middle East tensions rise

WASHINGTON, Oct 15 – The Israeli-Hamas war has sharpened focus on rising geopolitical risks for financial markets, as investors wait to see if the conflict draws in other countries with the potential to drive up oil prices further and deal a fresh blow to the world economy.

Israel’s Prime Minister Benjamin Netanyahu vowed on Sunday to “demolish Hamas” as his military prepared ground operations in Gaza to root out the militant group, whose deadly rampage through Israeli border towns stunned the nation.

S&P 500 E-Mini futures edged up after they opened on Sunday, last up 0.2%, while oil prices were virtually unchanged.

Trading had been choppy in the last week as Wall Street worried about whether other countries such as Iran would get involved, but investors were directing most of their attention to interest rates and issues related to the US economy.

“As long as the war remains relatively localized, US investors are keeping an eye on the Middle East but focused on the Federal Reserve and the earnings season,” said Paul Nolte, market strategist for Murphy & Sylvest in Elmhurst, Illinois.

Oil futures had leaped nearly 6% on Friday, as investors priced in the possibility of a wider Middle East conflict. The first indicator of reaction to weekend developments will likely come when oil starts trading in Asia later on Sunday.

“It looks like we’re headed for a massive ground invasion of Gaza and a large-scale loss of life,” said Ben Cahill, senior fellow in the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS). “Anytime you have a conflict of this scale, you will have a market reaction.”

The market reaction in the past week has been relatively muted, though Israel’s shekel currency took a big hit.

“I have no clue whether markets will remain relatively well behaved,” said Erik Nielsen, group chief economics adviser at UniCredit. “It almost certainly depends on whether this latest conflict remains localized or whether it escalates into a broader Middle Eastern war.”

The S&P 500 fell 0.5% on Friday. Safe-haven assets saw buying with gold up more than 3% on Friday and the US dollar touching a one-week high.

An expanding conflict would also likely cause inflation and, as a byproduct, interest rates around the world to accelerate further, said Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton, New Jersey.

However, while inflation and rates in other countries will likely rise in this worst-case scenario, the United States could be the exception as foreign investors pour capital into what they deem a safe haven during global conflict, Baumohl noted.

“Interest rates could go down,” he said. “Expect the dollar to strengthen.”

In Europe, economists said the bar for another rate hike from the European Central Bank was high.

The war between the Islamist group Hamas and Israel poses one of the most significant geopolitical risks to oil markets since Russia’s invasion of Ukraine last year.

“If the Ukraine war taught us anything, it’s not to underestimate the effect of geopolitics,” Nomura European economist George Moran said on the bank’s week ahead podcast.

Other energy markets could be impacted, as seen in recent developments such as Chevron halting natural gas exports through a major subsea pipeline between Israel and Egypt.

Rising oil prices are unlikely to have a significant impact on US gas prices or consumer spending, analysts noted.

The situation, however, bears monitoring, said Jack Ablin, chief investment officer at Cresset Capital.

“If all of a sudden either oil production is cut or oil transport is disrupted then that certainly creates problems not just for economies but for markets too,” he said.

Oil, shares of oil companies and commodities in general, and gold in particular could serve as effective hedges for investors, Ablin said.

(Reporting by Matt Tracy in Washington, Saqib Iqbal Ahmed and Sinéad Carew in New York, and Dhara Ranasinghe in London; Editing by Megan Davies, Deepa Babington, and Jamie Freed)

Investors zero in on health of consumer with retail sales, earnings

NEW YORK, Oct 13 – Investors in the coming week will get a look at the state of US consumers – whose spending drives around two-thirds of the economy – with a US retail sales report and earnings due from Procter & Gamble, Netflix, and a slew of banks.

Durable consumer spending has been a key reason for the economy’s resilience in the face of higher interest rates, with a better-than-expected economy supporting stocks this year. The S&P 500 is up about 13% year-to-date, though it has retreated roughly 6% from highs reached in late July.

Retail sales data, due out on Tuesday, may have to walk a tightrope to satisfy investors. A number that is far stronger than expected could stir fears of a rebound in inflation and bolster worries that the Federal Reserve will need to keep rates elevated for longer.

Conversely, a weak number could reignite concerns of an economic downturn that the US has so far managed to avoid, despite the Fed raising borrowing costs to their highest levels in decades.

“It’s hyper-important to us because that’s really what has been resilient in this economy,” said Art Hogan, chief market strategist at B Riley Wealth. “We really want to see what consumers are doing versus what they’re saying.”

Retail sales are expected to have risen 0.3% on a monthly basis in September, according to economists polled by Reuters.

As third-quarter earnings season heats up, investors are also on guard for signs that the conflict between Israel and Hamas is widening. Investors headed to safe-haven assets such as Treasuries and gold on Friday amid worries the conflict could intensify over the weekend.

There have been some signs that consumer strength may be wavering. A survey on Friday showed US consumer sentiment deteriorated in October, with households expecting higher inflation over the next year. The third straight monthly decline in sentiment reported by the University of Michigan was nearly across all demographic groups.

Major US banks on Friday warned the economy was slowing as customers depleted their savings.

“There are a lot of questions around how the consumer is holding up,” said Walter Todd, chief investment officer at Greenwood Capital.

As earnings reports arrive, investors will also focus on comments from bank executives about whether Americans are defaulting on loans and paying back credit card debt. Bank of America BAC.N reports results on Tuesday, with a number of regional banks expected in the coming week as well.

Earnings reports from other industries will also offer views on consumer behavior. They include consumer products giant Procter & Gamble, electric vehicle maker Tesla, streaming company Netflix, casino operator Las Vegas Sand, and America Airlines Group.

Todd, of Greenwood Capital, is focused on insight from companies about the cumulative effect of “higher inflation and higher rates on the consumer.”

“Throw on top of that the student loan payments kicking back up, that should all put incremental pressure on their ability to potentially spend,” he said.

To be sure, a strong retail sales number could also spark concerns, potentially renewing worries that a too-hot economy will push the Fed to take a more hawkish interest rate stance.

Such an outcome could extend a rise in Treasury yields that has pressured stocks in recent weeks. The US 10-year benchmark yield currently stands at 4.65%, after hitting a 16-year high earlier this month.

Jack Ablin, chief investment officer at Cresset Capital, said he is looking for the benchmark Treasury yield to come “off the boil” and fall to around 4.5%, boosting investors’ appetite for risk.

“If indeed we see waning strength in consumer spending, that will likely take some of the pressure off interest rates and the Fed,” Ablin said. “The conclusions from the consumer next week, I think, is going to be bad news is good news.”

(Reporting by Lewis Krauskopf; Editing by Ira Iosebashvili and Jonathan Oatis)

Safe-haven gold rallies over 3% as Middle East conflict intensifies

Oct 13 – Gold prices jumped more than 3% on Friday and were poised for their best week in seven months as the intensifying conflict in the Middle East sent investors scurrying for safe-haven assets.

Zero-yield bullion got an additional fillip from expectations that the US interest rates may have peaked.

Spot gold was up 3.2% at USD 1,928.15 per ounce by 0309 p.m. ET (1908 GMT). US gold futures settled 3.1% higher at USD 1,941.50. Prices were up 5.2% for the week.

Investors kept a tab on developments in the Middle East conflict, which has unnerved markets since the start of the week.

Israel said its infantry and tanks had carried out raids inside the Gaza Strip, its first announcement of a shift from an air war to ground operations to root out Hamas fighters a week after their deadly rampage in southern Israel.

This fueled inflows into assets considered to be safe havens such as gold.

“Investors are fleeing to safe havens as the risks of Middle East tensions grow,” said Edward Moya, senior market analyst at OANDA.

“If the geopolitical situation gets gloomier, there is a good chance that gold prices could go to the USD 2,000 levels this year. We have come from mid-USD 1,800s to mid-USD 1,900s, USD 2,000 is just a fraction of that.”

US consumer prices increased in September amid higher costs for rent and gasoline, but underlying inflation is slowing, data showed on Thursday.

Apart from the conflict, “despite yesterday’s warmer-than-expected (US) inflation report, currently there is an expectation that the Fed will not hike rates in the November meeting, which is also helping (gold) prices,” said David Meger, director of metals trading at High Ridge Futures.

Traders currently see around a 69% chance of the Fed leaving interest rates unchanged this year, according to the CME Fedwatch tool.

Spot silver climbed 4% to USD 22.72 per ounce, on track for its first weekly gain in three.

Platinum rose 1.4% to USD 880.42, while palladium dropped 0.3% to USD 1,141.24 and was set for a weekly decline.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Alexander Smith and Sherry Jacob-Phillips)

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