Gold rallies on Mideast conflict, climbing over 1% early Monday as haven investors sought the yellow metal.
Over a thousand people in Israel and the Palestinian territories have died since the Islamic group Hamas attacked Israeli towns Saturday and Israel retaliated by bombing Gaza on Sunday. The war between the two sides has the potential to escalate throughout the Middle East, and that’s sent oil prices soaring, along with other commodities like gold.
The U.S. jobs report for September came in strong Friday, putting a lid on gold’s upside potential, amid expectations that the Federal Reserve will keep interest rates high for some time. High rates are bearish for gold, making it less attractive as an alternate investment.
Front-month gold futures dropped 1.1% last week to settle at $1,845.20 an ounce on Comex, though the December contract gained 0.7% Friday. Bullion fell 5.1% in September after dropping 2.2% in August and rising 4.1% in July. The metal is up 1% in 2023. The December contract is currently up $14.0 (+0.76%) an ounce to $1859.20 and the DG spot price is $1847.20.
The U.S. nonfarm payrolls report for September topped all economists’ forecasts when it came out Friday, and the resilient labor market increased the odds that the Fed will continue its aggressive monetary policy to curb inflation. The U.S. added 336,000 jobs last month, the most since the start of the year, and the unemployment rate held at 3.8%, according to the report from the Bureau of Labor Statistics.
Fed policymakers have said they closely watch data on the labor market and inflation when setting monetary policy. The next big inflation reports – the producer price index and consumer price index for September – come out Wednesday and Thursday. The minutes of the last Fed policy meeting also come out Wednesday and will likely be closely watched by investors for signals on future action.
The Fed has raised rates by 5.25 percentage points since March 2022. The central bank held its benchmark interest rate at 5.25% to 5.50% in September. About 84.3% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in November. Just 15.7% 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.
Front-month silver futures lost 3.2% last week to settle at $21.72 an ounce on Comex, though the December contract advanced 3.4% Friday. Silver decreased 9.5% last month after slipping 0.6% in August and gaining 8.5% in July. It’s down 9.6% in 2023. The December contract is currently down $0.062 (+0.29%) an oucne to $21.785 and the DG spot price is $21.68.
Spot palladium slipped 6.3% last week to $1,185.50 an ounce, though it gained 1.8% Friday. Palladium rose 3% last month after sliding 5.3% in August and rising 3.6% in July. Palladium has plummeted 34% so far this year. Currently, the DG spot price is down $29.60 an ounce to $1150.50.
Spot platinum dropped 2.7% last week to $886.80 an ounce, though it rose 2.5% 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 $3.90 an ounce to $889.40.
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