Gold rises on Mideast ahead of Fed

Gold rises on Mideast ahead of Fed

Gold rises above $2000 an ounce early Monday amid safe haven demand stemming from the escalating conflict in the Mideast ahead of Fed.

Investors await Wednesday’s monetary policy decision from the Federal Reserve. The Fed has raised rates by 5.25 percentage points since March 2022 in an effort to curb inflation. It’s expected to keep interest rates unchanged at 5.25% to 5.50% this week, following a pause in September. Lower interest rates – or a pause in rate hikes – would be considered bullish for gold because the yellow metal is pressured when rates go up and other assets become more attractive.

Front-month gold futures edged up 0.2% last week to settle at $1,998.50 an ounce on Comex after the December contract gained $1.10 Friday. Bullion is up 7.1% so far this month after falling 5.1% in September and dropping 2.2% in August. The metal is up 9.4% in 2023. The December contract is currently up $11.10 (+0.56%) an ounce to $2009.60 and the DG spot price is $1999.50.

Israel expanded its ground and air assaults on Gaza on Sunday after intensifying over the weekend. Partial communications were restored after being cut Friday night. But fears remained that the conflict would spread in the region.

Meanwhile, market observers watched the economy for signs of resilience in the face of the Fed’s rate hikes. The core personal consumption expenditures price index, the Fed’s favorite inflation measure, accelerated to a four-month high in September as consumer spending picked up, data released Friday showed. Core PCE – the index minus volatile food and energy prices, 0.3% in September, in line with estimates, while consumer spending jumped 0.4% 

About 98.2% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep its federal funds rate unchanged Nov. 1, while 1.8% expect it to cut rates by 25 basis points. There is also a meeting scheduled for December at which most investors also predict the Fed will hold. 

U.S. consumer confidence data for October comes out Tuesday, followed by a series of key jobs reports later in the week. Wednesday brings the Fed rate decision, the ADP employment report for October and the ISM manufacturing report. Third-quarter productivity data come out Thursday along with weekly initial jobless claims. Then the closely watched U.S. monthly jobs report for October comes out Friday. 

Front-month silver futures decreased 2.6% last week to settle at $22.89 an ounce on Comex after the December contract slipped 2.1 cents Friday. Silver has increased 2% so far this month after decreasing 9.5% last month and slipping 0.6% in August. It’s down 4.8% in 2023. The December contract is currently up $0.798 (+3.49%) an ounce to $23.685 and the DG spot price is $23.40.

Spot palladium gained 1.1% last week to $1,134.00 an ounce, though it fell 1.4% Friday. Palladium has dropped 10% in October after rising 3% last month and sliding 5.3% in August. Palladium has plummeted 37% so far this year. The DG spot price is currently up $29.30 an ounce to $1162.50.

Spot platinum ticked up 60 cents last week to $906.60 an ounce, though it dropped 0.4% Friday. Platinum is down 0.5% in October after declining 6.6% last month and advancing 1.7% in August. Platinum is down 15% in 2023. The DG spot price has currently taken a strong upturn, $30.10 an ounce, to $935.50.

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