Gold rises on intensifying Mideast conflict

Gold rises on intensifying Mideast conflict

Gold rises early Wednesday on the intensifying Mideast conflict after hundreds of people died from a rocket attack Tuesday in Gaza that each side blamed on the other.

Fears that the war could expand to nearby countries, destabilizing the region, drew investors to gold as a traditional haven asset. 

Front-month gold futures rose $1.40 Tuesday to settle at $1,935.70 an ounce on Comex though the December contract lost 0.3% in the first two days of the week. Bullion fell 5.1% in September after dropping 2.2% in August and rising 4.1% in July. The metal is up 6% in 2023. The December contract is currently up $30.40 (+1.57%) an ounce to $1966.10 and the DG spot price is $1961.90.

Gold prices have risen more than $100 an ounce since the conflict began, even as strong U.S. economic reports have come in bolstering the likelihood that the Federal Reserve will keep interest rates high for some time. High rates are typically bearish for gold. 

Reports Tuesday included U.S. retail sales for September, which beat expectations; business inventories, which showed an increase for August; and industrial production, which beat estimates for September. 

The Fed will issue its Beige Book economic survey of the 12 U.S. regional banks on Wednesday afternoon, and Fed Chair Jerome Powell and other central bank officials are set to speak at different events Thursday. 

Investors will be closely tracking the report and comments for signals on whether the Fed will remain aggressive with 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. 

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 99.3% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged in November. Just 10.7% 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 rallied 1.1% Tuesday to settle at $23.02 an ounce on Comex, and the December contract advanced 0.6% in the first two days of the week. Silver decreased 9.5% last month after slipping 0.6% in August and gaining 8.5% in July. It’s down 4.2% in 2023. Theh December contract is currently up $0.336 (+1.46%) an ounce to $23.360 and the DG spot price is $23.26.

Spot palladium fell 0.2% Tuesday to $1,162.00 an ounce, though it edged up 0.1% in the first two days of the week. 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 currently down $17.70 an ounce to $1144.00.

Spot platinum gained 0.7% Tuesday to $907.10 an ounce, and it increased 2.2% in the first two days of the week. Platinum declined 6.6% last month after advancing 1.7% in August and gaining 5.2% in July. Platinum is down 15% in 2023. The DG spot price is currently down $6.60 an ounce to $901.30.

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