- Gold is up 5.2% so far this week
- According to the Israeli military, troops are carrying out their first ground attacks in Gaza
- Palladium faces weekly loss
Oct 13 (Portal) – Gold prices rose more than 3% on Friday, heading for their best week in seven months, as worsening conflict in the Middle East sent investors scrambling for safe havens.
Zero-yield bullion received an additional boost from expectations that U.S. interest rates may have peaked.
Spot gold rose 3.2% to $1,928.15 an ounce at 3:09 a.m. ET (1908 GMT). U.S. gold futures settled 3.1% higher at $1,941.50. Prices rose 5.2% this week.
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Investors were monitoring developments in the Middle East conflict, which has been unsettling the markets since the beginning of the week.
Israel said its infantry and tanks carried out raids inside the Gaza Strip. It was the first announcement of a shift from air warfare to ground operations to root out Hamas militants, a week after their deadly rampage in southern Israel.
This led to inflows into safe-haven assets such as gold.
“Investors are fleeing to safe havens as risks of Middle East tensions increase,” said Edward Moya, senior market analyst at OANDA.
“If the geopolitical situation becomes more dire, there is a good chance that gold prices could rise to $2,000 this year. We went from the mid-$1,800s to the mid-$1,900s, $2,000 is just a fraction of that.”
U.S. consumer prices rose in September due to higher costs for rent and gasoline, but underlying inflation is slowing, data showed on Thursday.
Aside from the conflict, “despite yesterday’s warmer-than-expected (U.S.) inflation report, there is currently an expectation that the Fed will not raise interest rates in the November meeting, which also helps (gold) prices,” David said Meger. Director of Metals Trading at High Ridge Futures.
According to the CME Fedwatch tool, traders currently see about a 69% chance that the Fed will leave interest rates unchanged this year.
Spot silver rose 4% to $22.72 an ounce, on track for its first weekly rise in three weeks.
Platinum rose 1.4% to $880.42, while palladium fell 0.3% to $1,141.24, posting a weekly decline.
Reporting by Ashitha Shivaprasad in Bengaluru; Edited by Alexander Smith and Sherry Jacob-Phillips
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