Safe-haven gold gains on MidEast conflict; US data in focus

By Ashitha Shivaprasad

(Reuters) – Safe-haven gold gained on Wednesday, buoyed by continued conflict in the Middle East, while investors looked forward to key U.S. economic data for further cues on the Federal Reserve’s policy path.

Spot gold was up 0.7% at $1,983.89 per ounce by 9:51 a.m. ET (1351 GMT), having declined in the previous two sessions and trading below a five-month high hit last week. U.S. gold futures rose 0.5% to $1,995.20.

The geopolitical concerns are not going away in the short term, which will continue supporting gold, said Bob Haberkorn, senior market strategist at RJO Futures.

Israel’s military intensified its bombing of southern Gaza overnight, amid international calls for a pause in fighting.

Limiting bullion’s gains, the dollar index and benchmark U.S. 10-year Treasury yields inched higher. [USD/] [US/]

Investor attention turns to U.S. third-quarter GDP figures due on Thursday and the U.S. PCE price index on Friday that could impact the Federal Reserve’s outlook on interest rates.

Higher interest rates raise the opportunity cost of holding non-yielding gold.

Markets are widely expecting the Fed to keep rates on hold at its policy meeting next month, according to the CME FedWatch tool.

If the data shows a slowdown, it will give Fed more reason not to raise interest rates, which should be very supportive for gold and see prices back above $2,000, added Haberkorn.

U.S. business activity ticked higher in October while output in the euro zone took a surprise turn for the worse, surveys showed on Tuesday, underscoring the diverging path for central bankers in the two regions.

On the physical front, China’s gold consumption in the first three quarters of 2023 climbed 7.32% from a year earlier on increasing demand amid economic recovery, the China Gold Association said.

Spot silver fell 0.3% to $22.87 per ounce, platinum gained 1.6% to $898.08 and palladium was up 0.9% to $1,130.20.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Mark Potter)