Gold prices rise amid Middle East tensions, optimism about interest rate cuts
(MENAFN) Gold prices experienced an upward movement in early Thursday trading, fueled by ongoing geopolitical tensions in the Middle East and growing optimism about a potential U.S. interest rate cut. Traders are closely monitoring economic data to gauge the Federal Reserve's next moves. As of 0331 GMT, spot gold, a safe-haven asset, increased by 0.3 percent to USD2,389.42 per ounce, while U.S. gold futures saw a slight decline of 0.2 percent, settling at USD2,428.40 per ounce. Kelvin Wong, a senior market analyst for Asia-Pacific at OANDA, highlighted that the longer-term market fundamentals remain favorable for gold, driven by the geopolitical strife and the decreasing trend of U.S. Treasury yields.
The geopolitical landscape has been further strained following a statement from Iranian President Masoud Pezeshkian to French President Emmanuel Macron, where he asserted that Iran would not stay silent in the face of aggression. This statement came amid concerns about a broader conflict in the region after the assassination of Hamas political chief Ismail Haniyeh in Tehran the previous week. The benchmark 10-year Treasury yields have declined, enhancing the appeal of non-yielding bullion. Concurrently, the U.S. dollar also weakened, adding to the attractiveness of gold as an investment.
Market sentiment is being shaped by expectations from financial institutions like JPMorgan and Citigroup, which anticipate that the U.S. Federal Reserve will reduce interest rates by 50 basis points in September. This expectation follows a surprisingly weak U.S. jobs report for July, released last week. Lower interest rates decrease the opportunity cost of holding non-yielding assets like gold, making them more attractive to investors. Additionally, market participants are awaiting the new unemployment claims data, scheduled for release at 1230 GMT, which could provide further insights into the economic outlook.
In the broader precious metals market, silver saw a significant rise of about 1 percent, reaching USD26.84 per ounce. Platinum also experienced a minor increase, up 0.1 percent to USD920.40 per ounce, while palladium gained 1.2 percent, climbing to USD892.75 per ounce. These movements reflect the overall positive sentiment towards precious metals amid the current economic and geopolitical uncertainties.
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