Gold inches higher on Middle East tension

Bengaluru — Prices of safe-haven gold edged higher on Thursday, supported by Middle East tension and optimism surrounding US rate cuts, while traders awaited economic data for clues on the Federal Reserve’s policy trajectory.

Spot gold was up 0.3% at $2,389.42/oz by 3.31am GMT. US gold futures slipped 0.2% to $2,428.40.

Longer-term fundamentals look supportive for gold, which included geopolitical tension in the Middle East and the downward trajectory of the US treasury yields, said Kelvin Wong, Oanda senior market analyst for Asia Pacific.

Iran would not stay quiet over aggression, President Masoud Pezeshkian told French counterpart Emmanuel Macron according to state media, amid the fear of more regional conflict after the killing of Hamas leader in Tehran last week.

The benchmark 10-year treasury yield slipped, making non-yielding bullion more attractive. While the dollar also edged lower.

Brokerages including JPMorgan, Citigroup and Wells Fargo have forecast a 50 basis point (bp) interest rate cut by the Fed in September after last week’s surprisingly weak US employment report for July.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Market focus will be on initial US jobless claims data due at 12.30pm GMT, while Richmond Fed president Tom Barkin is also expected to speak later in the day.

“In the near-term, I think market will consolidate around $2,350 level and move towards $2,500 later this year,” said Peter Fung, head of dealing at Wing Fung Precious Metals.

China’s central bank held back on buying gold for its reserves for a third straight month in July, according to data.

Spot silver rose nearly 1% to $26.84/oz, platinum edged 0.1% up to $920.40 and palladium gained 1.2% to $892.75.

Impala Platinum on Wednesday flagged $1bn of impairments amid lower value of its assets as metal prices plunged.

Reuters