Gold prices held gains, which put them near a record high, as markets assessed the escalation of the conflict in the Middle East, after Israel vowed to retaliate for Iranian missile strikes.
Gold traded above $2,660 an ounce after closing up 1.1% yesterday as Iran fired nearly 200 ballistic missiles at Israel. Israeli Prime Minister Benjamin Netanyahu called the move a big mistake and vowed to make Iran pay the price. The United States is reportedly working to bolster Israel’s defense readiness.
“Markets react as expected when they hear such news,” said Ole Hansen, head of commodity strategy at Saxo Bank. “Gold was already suffering from a buying frenzy, so the recent safe-haven buying needs to continue to avoid selling by funds that have wrongly placed bullish bets on gold.”
Gold has risen nearly 30% this year, hitting a series of records. The recent gains have boosted expectations of an interest rate cut by the Federal Reserve, which began its easing cycle last month with a 50 basis point cut.
Traders were also gauging the outlook for interest rates. Swap traders are betting on a one-in-three chance that the Fed will cut another half-percentage point in November, but that may not happen as expected, BlackRock Inc. Chief Executive Officer Larry Fink warned in an interview with Bloomberg Television.
In addition to any escalation of the conflict in the Middle East, traders will also be watching the US jobs report for September on Friday, which could be crucial in providing insights into the pace of interest rate cuts by the Federal Reserve.
Spot gold was steady at $2,662.78 an ounce at 6:40 a.m. in Singapore, below a record high of $2,685.58 reached last week. The Bloomberg Dollar Spot Index was down 0.1 percent. Silver also fell and platinum prices were unchanged.
