Gold prices steadied above the critical $2,000 barrier on Monday, underpinned by safe-haven demand as the Middle East situation worsened, although investors remained cautious ahead of the US Federal Reserve’s monetary policy meeting later this week.
Confusion over gold… and bullishness could continue
The gold market is witnessing clear turbulence during today’s trading moments, as gold futures rise, while spot contracts fall sharply.
Palestinian media reported that Israeli air strikes hit areas near the Al-Shifa and Al-Quds hospitals in Gaza City early on Monday, while the Palestinian resistance clashed with Israeli forces in a border area east of the town of Khan Yunis, in the southern Gaza Strip. It seems that the crisis is not going to end any time soon, which supports the rise in gold prices in the period ahead.
On Friday, gold prices reached $2,009.29 per ounce, breaking through the crucial psychological mark of $2,000 for the first time since mid-May, as investors purchased metal as a safe haven.
Market investors are now eagerly awaiting the US central bank’s monetary policy decision scheduled for Wednesday. While the Fed is widely expected to keep interest rates unchanged, the focus will be on comments from Fed Chairman Jerome Powell.
“The flurry of strong economic data means it will force the Fed to maintain a hawkish tone, despite growing concerns over the Middle East conflict,” said Matt Simpson, senior analyst at City Index.
“This should keep a floor in gold prices, which look very comfortably above $2,000 at the start of the week,” Simpson added.
The core personal consumption expenditure price index – the Fed’s preferred inflation measure – rose by 3.7% year-on-year in September according to data released on Friday, the smallest increase since May 2021, following a 3.8% rise in August.
Meanwhile, a University of Michigan survey revealed that consumer confidence in the US rose slightly during October, with the final confidence index figure registering 63.8 points, up from 63 points in the initial figure released earlier in the month.
Gold at Friday’s settlement
Gold prices stabilized at the end of trading on Friday, with an assessment of US data that showed a slowdown in inflationary pressures on an annual basis, and in light of continued demand for safe-haven assets with escalating geopolitical tensions.
At settlement, gold futures for December delivery settled at $1,998.5 an ounce, achieving a weekly increase of 0.2%, continuing their gains for the third consecutive week.
Gold and the dollar now
Gold futures rose 0.4% to $2,006 an ounce.
Meanwhile, spot gold contracts fell 0.46% to $1,997 an ounce.
By contrast, the dollar index stabilized at 106.357 points.
OTHER METALS
Silver stabilized in spot transactions at $23.12, platinum fell 0.4% to $900.28 and palladium rose 0.2% to $1,123.97.
