Bullion’s upside came despite data showing U.S. weekly jobless claims were unchanged at low levels last week
Safe-haven gold rose on Thursday as ongoing tensions in the Middle East added to the metal’s appeal despite robust economic data from the U.S. that raised prospects of fewer interest rate cuts.
Spot gold strengthened 1% at $2,384.83 per ounce at 1747 GMT. Prices hit an all-time high of $2,431.29 last Friday.
U.S. gold futures settled 0.4% higher at $2,398.
In the Middle East, Israel has indicated it will retaliate to attacks from Iran despite calls for restrain from other countries but has not said how.
When there are geopolitical tensions, the natural response is for investors to flee to gold, which is happening now. If the conflict further escalates, prices could go north of $2,500-$2,600, and if there is a ceasefire, then they could drop to $2,200, said Everett Millman, chief market analyst with Gainesville Coins.
He added: Central bank purchases are also placing a floor beneath the prices.
Bullion’s upside came despite data showing U.S. weekly jobless claims were unchanged at low levels last week. Strong U.S. economic data and hawkish rhetoric from Federal Reserve officials have prompted investors to drastically rethink the possibility of the Fed reducing rates any time soon.
Higher interest rates reduce the appeal of holding non-yielding gold.
Bank of China International (BOCI) analyst Xiao Fu said that with rate cut expectations from the Federal Reserve coming down and with the natural profit-taking that comes when prices rally quickly, there might be some pressure on gold, but a sharp drop is unlikely.
Spot silver added 0.3% to $28.30 per ounce.
The silver shortage narrative is gaining attention, with demand consistently surpassing new supply. This imbalance could lead to a significant price adjustment in the future, according to Alexander Zumpfe, a precious metals trader at Heraeus Metals.
