Gold prices surged on Friday, coming within close proximity to the critical $2,000 per ounce threshold, following reports of U.S. military strikes on targets with ties to Iran in Syria. These actions have reignited demand for safe-haven assets.
The strikes, targeting two facilities in eastern Syria, were carried out in response to recent attacks on U.S. troops in Iraq and Syria, as confirmed by the Pentagon on Thursday. These attacks had intensified since the onset of the Israel-Hamas conflict earlier this month.
The news has elevated concerns about a wider escalation in the Middle East conflict, potentially involving additional Arab nations. This, in turn, has driven investors toward traditional safe-haven assets.
The escalating tensions in the Israel-Hamas conflict have been a significant driver of gold price gains this month, propelling the precious metal to a level not seen in over five months earlier in October.
Spot gold saw a 0.2% rise, reaching $1,989.49 per ounce, while gold futures expiring in December increased by 0.1% to $1,999.0 per ounce by 00:47 ET (04:47 GMT). Both of these instruments traded slightly higher for the week.
Focus on Fed Meeting and Inflation Data
The ascent of gold prices was tempered by the strength of the U.S. dollar and Treasury yields, as financial markets positioned themselves for the upcoming Federal Reserve meeting.
While the central bank is widely expected to keep interest rates unchanged, it is anticipated to reiterate its commitment to maintaining higher rates for a longer period.
Before the meeting, market watchers are closely monitoring the reading on the Personal Consumption Expenditures Index, which serves as the Fed’s preferred inflation gauge. Any indications of persistent U.S. inflation would provide the Fed with additional motivation to maintain higher rates, which, in turn, might negatively impact non-yielding assets such as gold.
The demonstration of resilience in the U.S. economy, marked by stronger-than-expected U.S. Gross Domestic Product (GDP) data for the third quarter, further supports the Fed’s room for keeping rates elevated.
The U.S. dollar steadied on Friday and was set to register a 0.4% gain for the week.
Copper Prices on the Rise as China Shows Signs of Improvement
In the realm of industrial metals, copper prices experienced a slight increase on Friday, extending a recovery from over five-month lows, largely driven by data indicating improvements in the Chinese economy.
Copper futures rose by 0.3% to $3.6022 per pound, with a weekly gain of 1.1%.
Data released on Friday revealed marginal improvements in China’s industrial profits in the year up to September, following an 11% decline in the year up to August. Copper prices also benefited from better-than-expected third-quarter U.S. GDP data.
