Gold prices have surged to their highest level in over a week due to the ongoing conflict between Israel and Hamas and dovish comments from key US Federal Reserve officials, as reported by Reuters.
Spot gold, a significant benchmark in the precious metals market, reached $1,865.19 per ounce, marking its highest point since September 29. It remained steady at $1,860.21 as of 10:36 am. Meanwhile, US gold futures rose by 0.5 percent to $1,874.10.
This notable increase in gold prices follows a substantial 1.6 percent surge on the previous day, representing its most significant one-day gain in five months.
The Israel-Hamas conflict in the Middle East has exacerbated market volatility, adding to existing uncertainties as investors brace for corporate earnings reports and the release of crucial US inflation data later this week.
Dovish comments from influential figures at the US Federal Reserve have further enhanced gold’s appeal as a safe-haven asset. These remarks have also put pressure on the dollar and bond yields. Kyle Rodda, a financial market analyst at Capital.com, explained that events in the Middle East have acted as a catalyst for gold to rebound from oversold conditions. However, he noted that in the long run, US interest rates would play a more substantial role. Current yields are generally positive, which can diminish gold’s attractiveness since it doesn’t provide interest income.
Gold, often considered a safe-haven investment during periods of economic uncertainty, tends to lose some of its allure when interest rates begin to rise.
Gold Prices in the Domestic Market
In the domestic market, trends were mixed today. Gold prices on the Multi Commodity Exchange (MCX) are trading higher, while silver prices have experienced a decline on Tuesday.
Gold futures maturing on December 5, 2023, reached Rs 57,744 per 10 grams, following a slight increase of Rs 98 or 0.17 percent. The previous close was at Rs 57,572. It’s important to note that gold prices can vary across different regions in India due to factors like excise duty, making charges, and state taxes.
The escalation of military clashes between Israel and the Palestinian Islamist group Hamas has heightened demand for safe-haven assets, particularly gold. This ongoing conflict adds further unpredictability to the markets and increases concerns among investors, given the impending corporate earnings reports and the crucial release of US inflation data later this week.