Gold digs in above $1900 on Middle East conflict, after slipping from a one-month high early Monday as profit takers and technical sellers cashed in on the more than 3% rally in the previous session.
Prices surged last week on the conflict between Israel and Hamas, as haven investors sought a hedge against uncertainty. But gold had some support as Treasurys and the dollar weakened amid global efforts to calm the Mideast tensions.
Front-month gold futures rose 5.2% last week to settle at $1,941.50 an ounce on Comex after the December contract gained 3.1% Friday. Bullion fell 5.1% in September after dropping 2.2% in August and rising 4.1% in July. The metal is up 6.3% in 2023. The December contract is currently down $12.10 (-0.62%) an ounce to $1929.40 and the DG spot price is $1917.70.
Speculators in Comex gold raised their net short positions by 11,784 contracts in the week ended Oct. 10 to 14,788, according to the weekly Commitments of Traders report from the U.S. Commodity Futures Trading Commission.
In addition to the situation in the Middle East – and an anticipated ground assault by Israel into Gaza – investors were closely watching news on the economy for signals on the Federal Reserve’s next moves on monetary policy.
Last week, the U.S. consumer price index for September came in higher than expected, though the more closely watched “core” CPI figure – which excludes volatile food and energy prices – came in as expected. That probably makes the report neutral for policymakers in determining monetary policy. The Fed has raised rates by 5.25 percentage points since March 2022. High rates are bearish for gold, making it less attractive as an alternate investment.
The central bank held its benchmark interest rate at 5.25% to 5.50% in September. About 92.2% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in November. Just 7.8% expect it to raise rates another 25 basis points. There is also a meeting scheduled for December at which most investors also predict the Fed will hold, though also by a smaller margin.
Upcoming economic reports include U.S. retail sales, business inventories and industrial production on Tuesday. The Fed will issue its Beige Book economic survey of the 12 U.S. regional banks on Wednesday, and Fed Chair Jerome Powell and other central bank officials are set to speak at different events Thursday.
Front-month silver futures rallied 5.4% last week to settle at $22.90 an ounce on Comex, and the December contract advanced 4.3% Friday. Silver decreased 9.5% last month after slipping 0.6% in August and gaining 8.5% in July. It’s down 4.8% in 2023. The December contract is currently down $0.120 (-0.52%) an ounce to $22.775 and the DG spot price is $22.62.
Spot palladium fell 2.1% last week to $1,160.50 an ounce, though it edged up 0.1% Friday. Palladium rose 3% last month after sliding 5.3% in August and rising 3.6% in July. Palladium has plummeted 36% so far this year. Currently, the DG spot price is down $4.20 an ounce to $1156.00.
Spot platinum gained 70 cents last week to $887.50 an ounce after it increased 1.3% Friday. Platinum declined 6.6% last month after advancing 1.7% in August and gaining 5.2% in July. Platinum is down 17% in 2023. The DG spot price is currently up $6.90 an ounce to $893.10.
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