Gold prices rise: Impact of Middle East tensions, US economic trends

Gold prices soared to an unprecedented $2,696.78 per ounce as geopolitical tensions in the Middle East, particularly in Gaza, and key US economic data, fueled a surge in demand for the safe-haven asset. The spike followed Israel’s confirmation of the death of Hamas leader Yahya Sinwar, who was linked to escalating violence in the region. Gold, traditionally seen as a store of value during times of crisis, has become increasingly attractive to investors seeking stability amid global uncertainty.

US Economic Data Fuels Fed Rate-Cut Speculation

Contributing to gold's bullish momentum, stronger-than-expected US economic data released on the same day indicated solid retail sales growth for September, coupled with a decrease in jobless claims. The US Labor Department noted that Southeastern states, recovering from Hurricane Helene, saw a surprising drop in unemployment claims. These positive economic signals have intensified speculation that the Federal Reserve will continue its interest-rate cuts to bolster the economy. Lower interest rates generally make gold more appealing compared to interest-bearing assets, as it doesn’t offer a yield.

Gold's Bullish Momentum Set to Continue

According to Bob Haberkorn, Senior Market Strategist at RJO Futures, "These were solid data points. The Fed seems set to reduce rates further, and we could see another quarter-point cut before year-end." Gold has gained 1.4% this week, driven by investor caution ahead of the upcoming US presidential election on November 5. With both Donald Trump and Vice President Kamala Harris presenting distinct economic risks, gold is expected to remain a favored asset regardless of the outcome. Bullion has surged over 30% this year, benefiting from central bank purchases and expectations of further rate cuts.

As of market close, spot gold stood at $2,692.71 per ounce, up 0.7%. Silver remained mostly unchanged, while platinum dipped and palladium saw minor gains.