Safe-haven gold gains on MidEast conflict, US data in focus

Oct 25 – Safe-haven gold gained on Wednesday, buoyed by continued conflict in the Middle East, while investors looked forward to key US economic data for further cues on the Federal Reserve’s policy path.

Spot gold was up 0.7% at USD 1,983.39 per ounce by 1:40 p.m. ET (1740 GMT), having declined in the previous two sessions and trading below a five-month high hit last week. US gold futures settled 0.4% higher at USD 1,994.9.

The geopolitical concerns are not going away in the short term, which will continue supporting gold, said Bob Haberkorn, senior market strategist at RJO Futures.

Israel’s military intensified its bombing of southern Gaza overnight, amid international calls for a pause in fighting.

Limiting bullion’s gains, the dollar index and benchmark US 10-year Treasury yields rose.

Investor attention turns to US third-quarter GDP figures due on Thursday and the US PCE price index on Friday which could impact the Federal Reserve’s outlook on interest rates.

Higher interest rates raise the opportunity cost of holding non-yielding gold.

Markets are widely expecting the Fed to keep rates on hold at its policy meeting next month, according to the CME FedWatch tool.

If the data shows a slowdown, it will give the Fed more reason not to raise interest rates, which should be very supportive for gold and see prices back above USD 2,000, added Haberkorn.

US business activity ticked higher in October while output in the eurozone took a surprise turn for the worse, surveys showed on Tuesday, underscoring the diverging path for central bankers in the two regions.

On the physical front, China’s gold consumption in the first three quarters of 2023 climbed 7.32% from a year earlier on increasing demand amid economic recovery, the China Gold Association said.

Spot silver fell 0.2% to USD 22.90 per ounce, platinum gained 2.4% to USD 905.41 and palladium was down 0.2% to USD 1,117.03.

(Reporting by Ashitha Shivaprasad and additional reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Mark Potter and Shailesh Kuber)