Gold prices held firm at $2,659.05 per ounce on Thursday, with traders paying close attention to the escalating conflict in the Middle East while anticipating key U.S. economic reports that could impact interest rate outlooks. U.S. gold futures increased by 0.4% to $2,679.50, indicating that many continue to hedge against uncertainty. Given the growing geopolitical risks, gold’s stability highlights traders’ continued confidence in its safe-haven appeal.
Escalating geopolitical tensions prompt a move towards safe-haven assets.
Market participants are closely monitoring the escalating conflict between Israel and Hezbollah, with renewed airstrikes in Beirut deepening concerns. As the death toll rises, risk sentiment has shifted, drawing attention to safe-haven assets like gold. A prolonged military conflict could drive gold prices higher as traders seek shelter from increased volatility in other markets.
Alongside geopolitical risks, traders are also awaiting key U.S. economic data, including ISM services data and initial jobless claims, expected later in the day. On Friday, the U.S. nonfarm payrolls report will be released, which may influence expectations of a potential rate cut. The recent ADP National Employment report revealed U.S. private payrolls grew more than anticipated in September, pointing to a resilient labour market.
The market is split on future Fed rate cuts, with November expectations weakening
The U.S. Federal Reserve’s recent half-point rate cut reflects a shift from previous policy, but traders are split on further reductions. The CME FedWatch Tool indicates expectations for a 50-bps cut in November have dropped to 35%, down from 53% last week. Lower rates tend to support gold by lowering the opportunity cost of holding it, especially during uncertain times.
The Perth Mint reported that gold sales in September reached a 10-month high, highlighting increased demand for safe-haven assets. Silver sales also hit a seven-month high, though spot silver slipped 0.3% to $31.76 per ounce. Platinum and palladium saw slight gains, with platinum rising 0.3% to $1,005.65, and palladium inching up to $1,016.25.
Traders remain cautious ahead of key economic data, with concerns that volatility could increase in the coming days. The Middle East conflict and U.S. economic reports are expected to influence the short-term outlook for gold prices.
