Safe-haven gold consolidated gains on Tuesday as traders kept a close eye on developments surrounding the Israel-Hamas conflict, while also positioning for cues on the U.S. rate hike path from Federal Reserve Chair Jerome Powell this week.
Spot gold was up 0.1% at $1,920.36 per ounce by 2:14 p.m. ET (1814 GMT), and U.S. gold futures settled 0.1% higher at $1,935.7.
U.S. President Joe Biden will make a high-stakes visit to Israel on Wednesday as Gaza’s humanitarian crisis worsens.
Until there is some type of ceasefire or de-escalation, gold is going to hover above the $1,900 range, said Everett Millman, chief market analyst at Gainesville Coins.
Gold, considered a hedge against political and financial uncertainty, has risen more than 4% so far in October.
But if there is no escalation, further upward potential in gold is likely to remain limited as U.S. interest rate cuts could come later than expected, Commerzbank said in a note, reiterating its $1,900 end-December, and $2,100 an ounce end-2024 forecasts.
Powell’s speech on Thursday could shine more light on the U.S. central bank’s monetary policy path after recent dovish rhetoric from several Fed officials.
If there is a hint that the Fed is reaching the end of this rate hike cycle, that would be good for gold, even if we do not get any rate cuts soon, Millman added.
Higher interest rates increase the opportunity cost of holding non-yielding gold.
Limiting gains for bullion prices, benchmark U.S. 10-year Treasury yield hit a more than one-week high. [US/]
Silver firmed 1% to $22.81 per ounce, platinum rose 0.5% to $896.47. Palladium was down 0.6% at $1,136.13.
Source: Reuters
