In the midst of ongoing global turmoil and escalating conflicts, gold prices have been on a rollercoaster ride. While the precious metal had witnessed a significant uptrend in the past two weeks, it encountered a 0.6% decline recently, falling to $1,960.50 per ounce, and US gold futures also registered an 0.8% drop at $1,971.80.
Gold had experienced a robust rally, surging approximately 9% within the past two weeks. It reached a five-month high of $1,997.09 on October 20. The key driver behind this surge was the escalating conflict between Israel and Hamas in the Middle East region.
As the Israel-Hamas conflict intensified, investors sought safety in the form of precious metals, including gold. During times of geopolitical turmoil and uncertainty, gold is often considered a safe-haven asset, leading to increased demand.
The decline in gold prices came in the wake of the US dollar gaining strength. The US dollar rose by 0.3% against its rival currencies, making gold relatively more expensive for holders of other currencies. The inverse relationship between the US dollar and gold is a significant factor in the precious metal’s price movements.
Moreover, rising bond yields also exerted pressure on gold. The yield on the benchmark 10-year US Treasury had risen to 4.8653%, having crossed the 5% threshold on the previous day. As bond yields increase, they make non-interest-bearing assets like gold less attractive in comparison to interest-bearing investments.
Investors are currently keeping a close eye on economic data releases that could provide insights into the Federal Reserve’s future monetary policy decisions. The upcoming release of the US third-quarter GDP data on Thursday, as well as the US PCE price index data on Friday, is of particular interest. These reports will offer valuable information that could influence the Federal Reserve’s approach.
The Federal Reserve is set to hold its policy meeting from October 31 to November 1, and market participants are eagerly anticipating any indications of potential policy shifts that might be revealed during the meeting.
In addition to gold, other precious metals were also affected by the market dynamics. Platinum recorded a 1.5% dip, with prices dropping to $883.39, while palladium experienced a more modest 0.3% decrease, resulting in a price of $1,114.77.
Meanwhile, in the broader financial markets, global stocks managed to make gains. The MSCI all-world index demonstrated an increase of 0.4%, and an index of Asia-Pacific shares outside Japan managed to rise above a one-year low.
In the US, the stock indices on Wall Street showed positive performance during morning trade. The Dow Jones Industrial Average saw an increase of 0.81%, reaching 33,202 points. The S&P 500 also climbed by 0.74%, reaching 4,248 points, while the Nasdaq Composite registered a 0.73% increase, bringing it to 13,112 points.
Conversely, European markets, represented by the STOXX 600, remained relatively stable with little change in their performance.
The energy market, particularly crude oil prices, faced downward pressure following a series of disappointing economic data releases. The US crude benchmark fell by 0.57%, reaching $85.00 per barrel, and Brent crude was down by 0.52%, resulting in a price of $89.36 per barrel on the day.
As market conditions continue to evolve, gold and other asset classes remain sensitive to a variety of factors, including geopolitical tensions, economic indicators, and central bank policies.