Gold futures settled sharply higher on Friday as investors picked up the safe-haven asset amid rising worries about global economic outlook due to higher borrowing costs and the impact of the Israel-Hamas war.
Weak Chinese economic data, lower Treasury yields and a subdued dollar contributed as well to gold’s sharp uptick.
Gold futures for December ended higher by $58.50 or more than 3% at $1,941.50 an ounce, a three-week closing high.
Silver futures for December ended up $0.936 at $22.895 an ounce, while Copper futures for December settled at $22.895 per pound, gaining $0.936.
“Concerns that the Israel-Hamas war could lead to a wider war in the Middle East have sent gold prices sharply higher. Gold is seeing strong inflows as fears of a global economic slowdown grow,” says Edward Moya, Senior Market Analyst at OANDA. He adds that the demand for safe-havens are becoming more noticeable given monetary policy is restrictive enough and surging energy prices could easily kill the global outlook.
“High inflation and a resilient economy could point to more Fed rate hikes, but it seems the economy is finally starting to slow down. If the peak in rates is in place gold’s rebound should extend,” he says.
In U.S. economic news, the University of Michigan said its consumer sentiment index tumbled to 63.0 in October from 68.1 in September, while economists had expected the index to edge down to 67.4.
“Assessments of personal finances declined about 15%, primarily on a substantial increase in concerns over inflation, and one-year expected business conditions plunged about 19%,” said Surveys of Consumers Director Joanne Hsu.
The report also showed a sharp increase in year-ahead inflation expectations, which jumped to 3.8 percent in October from 3.2 percent in September, reaching the highest level since May.
China’s exports and imports shrank at a slower pace for a second month in September, while consumer inflation remained flat in the month, separate reports showed earlier today.
The producer price index fell 2.5% from a year earlier after a 3% drop in August.
Meanwhile, the conflict in the Middle East looks set to escalate after Israel’s military today called for all civilians of Gaza City, more than 1 million people, to relocate south within 24 hours.
The Israeli military said it would operate “significantly” in Gaza City in the coming days and civilians would only be able to return when another announcement was made.
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