Gold at four-month high after the U.S. killed a key Iranian military commander, boosting the precious metal’s appeal as hedge against geopolitical uncertainty.
U.S. President Donald Trump ordered the airstrike on Baghdad International Airport that killed Qasem Soleimani, the head of Iran’s Islamic Revolutionary Guards Corps’ Quds Force unit, CNN reported. The Pentagon called the Friday morning move a “decisive defensive action to protect U.S. personnel abroad” that was intended to deter “future Iranian attack plans.” Iranian-backed militias this week attempted to storm the U.S. embassy in Baghdad. Iran’s supreme leader Ayatollah Ali Khamenei said “severe retaliation” awaits the commander’s killers.
Gold received an added lift this morning when the Institute for Supply Management (ISM) released data showing its manufacturing index was down for December with a reading of 47.2%, November’s was 48.1%. The index came in much weaker than the forecast of 49.0%. The manufacturing sector’s sentiment now rests at its lowest point since July, 2009.
February gold futures approached $1,550 an ounce early Friday on Comex. They rose 0.3% Thursday to settle at $1,528.10, the highest closing price since late September. The yellow metal had its biggest annual gain since 2010 last year, supported by looser monetary policy, global unrest and buying from central banks and exchange-traded funds.
Gold advanced 0.7% this week, through Thursday, and rose 3.4% in December. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased 0.23% Thursday to 895.30 metric tons, the highest level since Nov. 29, Reuters reported.
Trading has been light this week around the New Year holidays, with most of the world’s financial markets closed Wednesday for New Year’s Day. Low liquidity typically makes markets more volatile.
Gold was also bolstered by a weaker dollar and hopes for a stronger U.S. economy. The Labor Department reported Thursday that the number of Americans filing claims for jobless benefits slipped last week, a positive signal for the labor market. U.S. jobless claims decreased by 2,000 to a seasonally adjusted 222,000 for the week ended Dec. 28, the department reported.
In economic news, investors are awaiting key monthly manufacturing data from the U.S. scheduled for release on Friday. Minutes of the last Federal Open Market Committee meeting are also set to come out.
Silver rose 0.7% Thursday to settle at $18.05 an ounce on Comex. The March futures contract has advanced 0.6% so far this week and gained 4.8% in December.
Spot palladium, a metal used primarily in autocatalysts, rallied 2.8% this week through Thursday amid a supply crunch. It advanced 5.6% in December. Spot platinum was up 3.6% so far this week and increased 7.9% in December.
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