Gold rises on support from Middle East tension

Bengaluru — Gold prices edged higher on Thursday, buoyed by a weaker dollar and escalating tension in the Middle East, while investors await more US economic data that could shed light on the Federal Reserve’s interest rate outlook.

Spot gold was up 0.1% at $2,026.7/oz at 3.28am GMT after hitting its highest since February 9 on Wednesday. US gold futures edged 0.1% higher to $2,036.9/oz. The dollar index extended losses for the fourth consecutive day, turning the greenback-priced bullion more appealing to overseas buyers.

“The short-term outlook for gold is mixed, with delays to the rate-cutting timeline being somewhat countered by safe-haven demand from the geopolitical picture,” said Tim Waterer, chief market analyst at KCM Trade.

Israel intensified its bombardment of Rafah in Gaza’s south and more than 12 members of one family were killed in an air strike, as the ruined Palestinian enclave’s health ministry announced 29,313 deaths in the war so far.

“We have a raft of manufacturing and services data due today and any signs of economic weakness could spark hope that rate cuts could be on the way, which may assist gold,” Waterer said.

Initial jobless claims data is due at 1.30pm GMT, while flash US manufacturing and flash US services data is scheduled for 2.45pm GMT.

Minutes of the Fed’s latest policy meeting released on Wednesday showed that bulk of policymakers were concerned about the risks of cutting interest rates too soon.

January inflation data, with consumer and wholesale prices rising faster than expected, complicate upcoming US central bank interest rate decisions, Richmond Fed president Thomas Barkin said.

Markets are currently pricing in a 72% chance of a cut in June, according to the CME Fed Watch Tool. Lower interest rates boost the appeal of holding non-yielding bullion.

Elsewhere, spot platinum was up 0.3% at $885.30/oz, palladium rose 0.6% to $955.63 and silver gained 0.1% to $22.89/oz.

Reuters