Gold sparkles amid geopolitical tension

Bengaluru — Gold prices climbed on Thursday, as risks of a widening Middle East conflict raised bullion’s safe-haven appeal, overshadowing pressures from higher-for-longer US interest rates.

Spot gold was up 0.6% at $2,374.97/oz by 4.29am GMT, after hitting a record high of $2,431.29 last Friday. US gold futures edged 0.1% higher to $2,389.70.

“Given the fact that we do have a lot of uncertainty on the geopolitical front, which is supporting this upward trend that is still prevalent in gold,” said Kelvin Wong, a senior market analyst for Asia Pacific at Oanda.

Israel will make its own decisions about how to defend itself, Prime Minister Benjamin Netanyahu said, as Western countries pleaded for restraint in responding to a volley of attacks from Iran.

Though, “US interest rates remaining higher for a longer may be adding some pressure to the ongoing boost for gold.... In the short term, we will start to see a bit of consolidation and a potential pullback,” Wong said.

Higher interest rates reduce the appeal of holding non-yielding bullion.

Fed officials are now being more careful about discussing the timing of rate cuts, with Fed chair Jerome Powell on Tuesday signalling rates may stay higher for longer.

Traders of futures contracts tied to the Fed’s policy rate are now pricing in less than 50 basis points (bsp) of rate cuts for 2024, while betting on the first quarter point cut to arrive in September.

Elsewhere, European Central Bank’s policymaker Mario Centeno said “even after 25bps or 50bps of cuts we’ll still have a tight monetary policy stance”.

Spot silver rose 0.6% to $28.38/oz, platinum was steady at $938.40 and palladium was up 0.2% at$1,027.82.

Reuters