Amidst a backdrop of escalating geopolitical tensions, gold, often perceived as a refuge during volatile times, experienced an upswing on Friday, inching tantalizingly close to the pivotal $2,000 per ounce benchmark. The catalyst for this spike was the recent U.S. military action targeting facilities in Eastern Syria, which are linked to Iran. This military intervention, as elucidated by the Pentagon, was in response to the escalating attacks on U.S. forces stationed in Iraq and Syria. An intriguing dimension to this narrative is the timing of these attacks, which saw an uptick coinciding with the intensification of the Israel-Hamas conflict earlier in the month.
The confluence of these events stoked apprehensions of a more expansive Middle Eastern conflagration, with the potential of other Arab nations being drawn into the fray. These geopolitical tremors naturally led investors to gravitate towards traditional safe-haven assets, with gold being a prime beneficiary.
Moreover, the Israel-Hamas conflict has emerged as a significant determinant of the bullish trajectory of gold this month, catapulting the precious metal to a zenith not witnessed in over five months.
Gold's Performance Metrics
By the close of trading, spot gold had appreciated by 0.2%, registering a value of $1,989.49 per ounce. Concurrently, gold futures slated for December witnessed a modest uptick of 0.1%, clocking in at $1,999.0 an ounce as of 00:47 ET (04:47 GMT). Both these metrics underscored a positive trajectory for the week. However, the rally in gold was tempered by the robust performance of the dollar and an upward movement in Treasury yields. Market participants are also keenly awaiting the impending Federal Reserve meeting, with speculations rife regarding the bank's monetary stance.
While the consensus veers towards the Federal Reserve maintaining the status quo vis-à-vis interest rates, there are anticipations of the bank reaffirming its strategy of sustaining elevated rates over an extended timeframe.
In the lead-up to this crucial meeting, investors are also eyeing the release of the personal consumption expenditures index, the Fed's favored inflation barometer. An inflationary trend that remains entrenched could potentially bolster the Federal Reserve's resolve to sustain higher interest rates, a move that traditionally doesn't bode well for assets like gold that don't yield returns. Furthermore, the U.S. economy's resilience, as evidenced by the recently released U.S. GDP data for Q3, which surpassed market expectations, offers the Federal Reserve ample latitude to persist with higher interest rates. The U.S. dollar, in this context, exhibited stability on Friday, poised to register a growth of 0.4% over the week.
Industrial Metals & Economic Data
Diverging from precious metals, the industrial metal spectrum saw copper prices registering growth on Friday. This can be attributed to encouraging signs from the Chinese economy, coupled with robust U.S. GDP data for Q3. Copper futures appreciated by 0.3%, standing at $3.6022 a pound, reflecting an overall weekly growth of 1.1%. The positive sentiment surrounding copper was further buoyed by data pointing to a marginal improvement in China's industrial profit margins for September, marking a decline of 9%, a positive shift from the 11% dip witnessed up to August.
