Gold Prices Ease as Traders Focus on Middle East Tensions, US Economic Data
Gold prices dipped on Wednesday, halting a recent rally as traders turned their attention to upcoming US economic data and ongoing developments in the Middle East, Reuters reports.
After rising over 1% the previous day, spot gold fell by 0.5% to $2,649.41 per ounce by 1:40 p.m. ET (1740 GMT). US gold futures also closed 0.8% lower at $2,669.70.
The drop in gold came after a strong performance on Tuesday when prices surged following Iran’s missile strikes on Israel, heightening geopolitical tensions. However, gold’s upward momentum was limited by a strengthening US dollar, which makes dollar-denominated gold more expensive for buyers using other currencies.
Bob Haberkorn, senior market strategist at RJO Futures, noted that despite the stronger dollar, traders are cautious about selling gold due to ongoing uncertainty.
“There’s too much ahead of us, too many unknowns right now in the next 24 hours to be selling gold,” Haberkorn stated.
He added that prices could rise above $2,700 per ounce if the Israel-Iran conflict escalates further.
Gold, which is often seen as a safe-haven investment during periods of political and economic turmoil, has climbed over 28% this year and remains close to its all-time high of $2,685.42 per ounce.
In the longer term, analysts believe that real interest rates will play a critical role in determining gold prices. Daniel Hynes, a senior commodities strategist at ANZ, said in a note that the outlook for real interest rates will be a key driver for gold. Low interest rates generally boost gold as it becomes more attractive compared to interest-bearing assets.
Market participants are also closely watching the US Federal Reserve’s next move, with a 61% chance of a 25-basis-point interest rate cut in November, according to traders. Private payrolls increased by 143,000 jobs last month, as reported by ADP, and all eyes are now on the US nonfarm payrolls data, due on Friday, for further clues on the Fed’s policy path.
In the broader metals market, silver rose 0.7% to $31.63 per ounce, platinum gained 2% to $1,005.55, and palladium increased by 1.9% to $1,014.25.
