Mideast risks cushion safe-haven gold despite strong US data

Oct 26 – Gold ticked higher on Thursday as steady safe-haven demand fuelled by the Middle East conflict helped bullion weather pressure from strong US data that quelled recession fears.

Spot gold was up 0.3% at USD 1,986.39 per ounce by 1:50 p.m. ET (1750 GMT). Earlier in the session, prices were just shy of the five-month high hit on Friday.

US gold futures settled 0.1% higher at USD 1,997.4.

The US economy grew at its fastest pace in nearly two years in the third quarter, again defying dire warnings of a recession issued since 2022.

The number of people filing new claims for state unemployment benefits rose to a seasonally adjusted 210,000 during the week ending Oct. 21 from 200,000 in the prior week, the Labor Department reported. Claims are at the very low end of their range of 194,000 to 265,000 for this year.

The data “paint the picture of a very strong US economy,” supporting the narrative that the Fed might need to raise rates more, which is negative for gold, said Edward Moya, senior market analyst at OANDA.

“I am surprised we are not seeing a big move downward in gold. I think there is a realization that geo-political risks are not going away anytime soon.”

The US dollar rose 0.1%, making gold more expensive for overseas buyers.

Gold has gained 9% over the past two weeks as investors sought refuge from the potential fallout of the Israel-Hamas conflict. But the lingering prospects of higher interest rates have softened any upside in non-yielding bullion.

In Europe, the ECB left interest rates unchanged as expected, snapping an unprecedented streak of 10 consecutive hikes.

Focus shifts to the PCE price index due on Friday for cues on what to expect from the Fed’s policy meeting next week.

Silver slipped 0.4% to USD 22.79 an ounce, platinum was steady at USD 902.74 and palladium gained 0.8% to USD 1,134.86.

(Reporting by Ashitha Shivaprasad and additional reporting by Sherin Elizabeth in Bengaluru; Editing by Dhanya Ann Thoppil, Richard Chang, and Krishna Chandra Eluri)