Gold may rise for a second week due to unrest in the Middle East

20 Oct 2023 , 10:22 AM

Due to demand spurred by the Middle East war and predictions that the Federal Reserve may be done raising interest rates, gold prices reached a three-month high on Friday and were expected to rise for a second straight week.

Spot gold was unchanged at $1,973.99 an ounce, having reached its highest level since July 20. Futures for US gold increased by 0.3% to $1,986.10.

 Israeli Defence Minister Yoav Gallant hinted that a ground invasion aimed at destroying Hamas may be approaching when he informed troops assembled at the Gaza border on Thursday that they would soon see the Palestinian enclave ‘from inside.’

Gold has increased 2.2% this week so far. Gold is frequently viewed as a safe haven of value in uncertain political and financial environments.

Fed Chair Jerome Powell acknowledged ‘in principle’ and ‘at the margin’ that the increase in rates was contributing to the tightening of financial conditions and might reduce the need for more rate hikes in remarks to the Economic Club of New York.

Since gold is valued in dollars and yields no interest, owning it has a higher opportunity cost when interest rates rise.

According to Dallas Fed President Lorie Logan, the central bank has room to consider its next monetary policy action in light of recent data and rising bond market borrowing costs.

The CME FedWatch tool indicates that at the Fed’s policy meeting next month, markets are largely expected to maintain the current level of interest rates.

According to data, existing house sales fell to a 13-year low in September, and the number of Americans filing new claims for unemployment benefits unexpectedly decreased last week, suggesting that strong job growth continued in October.

Spot silver declined 0.3% to $22.97 an ounce, palladium declined 0.3% to $1,109.55, while platinum declined 0.5% to $885.97.

For feedback and suggestions, write to us at [e-mail]