Mideast risks cushion safe-haven gold despite strong US data

By Ashitha Shivaprasad

(Reuters) – Gold was little changed on Thursday as steady safe-haven demand fuelled by the Middle East conflict helped bullion weather pressure from strong U.S. data that quelled recession fears.

Spot gold was steady at $1,980.69 per ounce by 11:58 a.m. ET (1558 GMT). Earlier in the session, prices were just shy of the five-month high hit on Friday.

U.S. gold futures fell 0.2% to $1,990.70.

The U.S. economy grew at its fastest pace in nearly two years in the third quarter, again defying dire warnings of a recession issued since 2022. The number of people filing new claims for state unemployment benefits rose to a seasonally adjusted 210,000 during the week ending Oct. 21 from 200,000 in the prior week, the Labor Department reported. Claims are at the very low end of their range of 194,000 to 265,000 for this year.

The data “paint the picture of a very strong U.S. economy,” supporting the narrative that the Fed might need to raise rates more, which is negative for gold, said Edward Moya, senior market analyst at OANDA.

“I am surprised we are not seeing a bigger move downward in gold. I think there is a realisation that geo-political risks are not going away anytime soon.”

The U.S. dollar rose 0.3%, making gold more expensive for overseas buyers. [USD/]

Gold has gained 9% over the past two weeks as investors sought refuge from the potential fallout of the Israel-Hamas conflict. But the lingering prospects of higher interest rates have softened any upside in non-yielding bullion.

In Europe, the ECB left interest rates unchanged as expected, snapping an unprecedented streak of 10 consecutive hikes.

Focus shifts to the PCE price index due on Friday for cues on what to expect from the Fed’s policy meeting next week.

Silver slipped 0.8% to $22.71 an ounce, platinum lost 0.2% to $901.13 and palladium gained 0.5% to $1,131.36.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Dhanya Ann Thoppil and Richard Chang)