As Middle Eastern tensions remain intact, gold prices increase in early trade

18 Oct 2023 , 10:01 AM

Despite strong U.S. economic data and a high-rate scenario, gold prices increased on Wednesday as a result of fears of a regional conflict growing in the wake of a tragic blast in Gaza.

Spot gold was up 0.4% to $1,929.89 per ounce, and U.S. gold futures were up 0.4% to $1,942.70.

On Tuesday, an explosion at a hospital in Gaza City claimed the lives of almost 500 Palestinians; Israeli and Palestinian officials put the blame on one another. The explosion sparked demonstrations in the West Bank and other parts of the Middle East.

Despite recent strong U.S. economic statistics supporting predictions of higher-for-longer interest rates, which tend to boost the dollar and bond yields, gold prices have increased by around $100 since the fighting started. 

Retail sales and production at American manufacturers rose more than anticipated in September, suggesting the third quarter’s economic performance was strong.

The markets are now waiting for rate clues from Federal Reserve Chair Jerome Powell’s speech on Thursday.

Thomas Barkin, the president of the Richmond Fed Bank, stated on Tuesday that the increased cost of long-term borrowing is placing downward pressure on demand.

It has taken much longer than anticipated for inflation to decline, according to Neel Kashkari, president of the Minneapolis Fed Bank, and it is ‘still too high.’

The third quarter of China’s economy probably slowed, according to data that is due out on Wednesday.

Silver spot prices increased by 0.5% to $22.93, platinum increased by 0.2% to $898.77, and palladium decreased by 0.8% to $1,134.93.

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