Gold climbs on Middle East unrest

Gold prices climbed on Thursday as the Middle East conflict kept investors worried, with safe-haven bullion standing firm despite a stronger US dollar and bond yields.

Spot gold rose 0.4% to $1,986.79 per ounce by 3.48am GMT. US gold futures edged up 0.1% to $1,997.10.

The dollar and benchmark US 10-year treasury yields climbed after data indicated that new-home sales surged to a 19-month high in September, affirming market expectations of prolonged high rates heading into 2024.

Investors now await the US GDP numbers for the third quarter later in the day and the personal consumption expenditures (PCE) price index on Friday ahead of the Federal Reserve’s rate decision next week.

“The Federal Reserve clearly sees higher interest rates as a route to reining in inflation,” said Nikos Kavalis, MD at Metals Focus.

There’s nothing stopping them from one more hike, as the US economy is pretty robust, Kavalis added.

Meanwhile, the European Central Bank (ECB) is expected to keep interest rates unchanged at a record high on Thursday, snapping a 15-month streak of hikes.

On the geopolitical front, Israel kept up its strikes on Hamas targets in Gaza as it prepared for a ground invasion, and world powers at the UN failed to secure plans to deliver critical humanitarian aid.

The impact of geopolitical events has been generally short-lived on gold vs the impact of macro-events or financial catastrophes that may force global authorities to implement very aggressive monetary and fiscal policies, Kavalis noted.

Gold is often sought as a safe asset in times of economic and political turmoil, though higher interest rates dampen the appeal of bullion, which pays no interest.

Spot silver gained 0.2% to $22.93 an ounce, platinum fell 0.4% to $899.50 and palladium eased 0.1% to $1,124.80. 

Reuters