Gold drifts higher as Middle East tension attracts safe-haven inflows

Jan 18 – Gold prices firmed on Thursday, aided by safe-haven demand amid the Middle East conflict, while investors looked out for further clarity on the US Federal Reserve’s future interest rate path.

Spot gold rose 0.7% to USD 2,019.12 per ounce by 02:06 p.m. ET (1906 GMT) after hitting a five-week low in the previous session.

US gold futures settled 0.8% higher at USD 2021.6.

Geopolitical tensions are unintentionally coordinating efforts to keep gold in the USD 2,000 range as there is so much uncertainty, said Daniel Pavilonis, senior market strategist at RJO Futures.

The US on Wednesday put the Yemen-based Houthi rebels back on its list of terrorist groups, as the militants attacked their second US-operated vessel in the Red Sea region this week.

Atlanta Federal Reserve President Raphael Bostic said on Thursday that he was open to reducing US interest rates sooner if there is “convincing” evidence in coming months that inflation is falling faster than he expected.

Traders are pricing in a 57% chance of a March rate cut, according to CME’s Fed Watch tool.

Gold investors are analysing how much of a negative impact delayed interest rate cuts might have on prices, though a bunch of US data misses could help gold’s cause, said Fawad Razaqzada, market analyst at City Index, in a note.

Data showed jobless claims fell last week to the lowest level since late 2022, suggesting job growth likely remained solid in January.

Spot silver was up 0.9% at USD 22.74 per ounce.

“We forecast a 2024 price of USD 24.33/oz; ETF (exchange traded funds) demand may recover from liquidation; we anticipate deficits to buoy prices,” HSBC said in its 2024 outlook.

Platinum climbed 2.4% to USD 904.74, and palladium gained 2.7% to USD 940.28.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Tasim Zahid, Shailesh Kuber, and Shweta Agarwal)