By Swati Verma
(Reuters) – Gold climbed on Thursday as the Middle East conflict continued to grip investors, with bullion standing firm despite the U.S. dollar and bonds yields being boosted by a higher-for-longer interest rate outlook.
Spot gold rose 0.3% to $1,984.79 per ounce by 0615 GMT. U.S. gold futures were steady at $1,994.90.
The dollar and benchmark U.S. 10-year Treasury yields advanced after data indicated that new-home sales surged to a 19-month high in September, emboldening expectations of prolonged high rates heading into 2024.
Investors now await the European Central Bank’s policy outcome and U.S. GDP numbers later in the day, with particular focus on the PCE price index on Friday ahead of the Federal Reserve’s rate decision next week.
The U.S. economy likely grew in the third quarter at its fastest pace in nearly two years.
“The Fed clearly sees higher interest rates as a route to reining in inflation,” said Nikos Kavalis, managing director at Metals Focus.
There’s nothing stopping them from one more hike as the U.S. economy is pretty robust, Kavalis added.
On the geopolitical front, Israeli ground forces operated within the northern Gaza Strip on Thursday, attacking multiple Hamas targets before withdrawing, the military said in a statement.
The impact of geopolitical events has been generally short-lived on gold compared to macro events or financial catastrophes that may force global authorities to implement very aggressive monetary and fiscal policies, Kavalis noted.
Gold is often sought as a safe asset in times of economic and political turmoil, although higher interest rates dampen bullion’s appeal as it pays no interest.
“While the war will continue to drive haven flows towards gold, further price gains also hinge on the Fed’s rate cycle nearing an end,” ANZ analysts wrote in a note.
In other metals, spot silver gained 0.1% to $22.92 an ounce, platinum fell 0.1% to $901.83 and palladium eased 0.4% to $1,121.33.
(Reporting by Swati Verma in Bengaluru; Editing by Varun H K)
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