Oil prices may not be getting the risk premium many thought they would from the latest Middle East conflagration, but gold seems to be taking it on the chin and returning to its role as the safe-haven of choice – especially after the dollar’s collapse this week.
The most active gold futures contract on New York’s Comex for December settled up $12, or 1%, at $1,887.30 an ounce after hitting a session high of $1,890.85. This left the benchmark gold futures contract less than $10 away from a return to the psychologically bullish $1,900 level. Comex gold last traded above $1,900 on the 27th of September.
The spot price of gold, which is more closely watched by some traders than futures, was $1,874.33, up $13.81 or 0.7% on the day. The session high was $1,858.70.
Gold rose as the US dollar index retreated further from last week’s 11-month highs and bond yields, as measured by the US 10-year Treasury note, retreated from the highest levels since 2007.
“Falling global bond yields continue to fuel gold’s rally,” said Ed Moya, analyst at online trading platform OANDA. “Gold is seeing inflows on both uncertainty over how much market turmoil will result from the Israel-Hamas war and as the Fed tries to cool the economy.”
Moya noted that gold has recovered around 40% of its losses over the past month. “The bullish momentum could continue until price action approaches the $1,896 level. If Wall Street becomes convinced that interest rates have peaked and that further tightening is unlikely in 2024, gold could rally back above the $1,920 level.”
