Gold prices saw a significant 3% surge on Friday, marking their most impressive weekly performance in seven months. This rapid increase in gold’s value was primarily attributed to the escalating Middle East conflict, prompting investors to seek refuge in safe-haven assets.
In Kerala, the price of a gram of 22K gold climbed by Rs 140, soaring from Rs 5,540 to Rs 5,400. The cost of one sovereign gold also experienced an upswing, now standing at Rs 44,320 compared to Rs 43,200 just a day earlier. For 24K gold, the price per gram rose to Rs 6,044 from Rs 5,891.
Furthermore, the outlook for zero-yield bullion was bolstered by the belief that US interest rates might have reached their peak. Spot gold showed a remarkable 3.2% increase, reaching $1,928.15 per ounce by 3:09 pm ET (1908 GMT), while US gold futures settled 3.1% higher at $1,941.50. This remarkable surge translated to a 5.2% weekly gain.
The ongoing developments in the Middle East conflict continued to rattle markets. Israel’s announcement of ground operations within the Gaza Strip, marking a shift from aerial warfare, further contributed to inflows into safe-haven assets, with gold being a notable beneficiary. As Edward Moya, senior market analyst at OANDA, pointed out, “Investors are fleeing to safe havens as the risks of Middle East tensions grow,” and there’s potential for gold prices to breach the $2,000 mark if the geopolitical situation worsens.
In addition to the geopolitical tensions, expectations that the Federal Reserve might not raise interest rates in the upcoming November meeting provided support for gold prices. David Meger, director of metals trading at High Ridge Futures, noted that despite a warmer-than-expected US inflation report, the consensus currently leans toward the Fed maintaining its rates. Traders are estimating around a 69% likelihood of the Fed leaving interest rates untouched for the rest of the year, according to the CME Fedwatch tool.
Silver also made significant gains, surging by 4% to $22.72 per ounce, marking its first weekly increase in three weeks. Platinum rose by 1.4% to $880.42, but palladium experienced a slight dip of 0.3% to $1,141.24, potentially leading to a weekly decline.
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