Gold prices soared near their all-time high on Monday as fears of an expanded conflict in the Middle East bolstered the precious metal’s safe haven demand and Treasury yields slipped lower ahead of the release of several economic reports that could give the market a clearer window on the U.S. inflation picture.
Gold had climbed by nearly 1.8% by the late afternoon, gaining $43.56 to trade at $2,471 per ounce to record its best showing in 10 days. The yellow metal’s impressive tally hovered near its all-time high of $2,482 per ounce set in mid-July. Silver also made strides, gaining $0.64 to trade just under $28 per ounce – up more than 2%.
Safe-haven demand for both precious metals were aided at home with a slide in U.S. Treasury yields and more significantly abroad, as the conflict in the Middle East threatened to expand.
Israeli forces continued to launch strikes in southern Gaza on Monday as Hamas leaders rejected a plan for cease-fire negotiations in favor of new terms, even as U.S. diplomats doubled efforts to bring both sides to the bargaining table. Earlier, Israel had intercepted “projectiles” that were launched into the country from inside Lebanon – threatening to enlarge the war into another region. The U.S. also appeared to be preparing for a worst-case scenario, sending an additional guided missile submarine to the area on Sunday.
The rapidly unfolding events overseas renewed gold’s appeal as a hedge against geopolitical uncertainty.
“Every way you look at it, gold now screens as a well-populated trade. The Street is unanimously bullish, but macro fund positioning may now be tapped out without an imminent recession,” TD Securities said in a note.
Bullion traders will look for additional market catalysts this week with the release of Producer Price Index and Consumer Price Index data on Tuesday and Wednesday, respectively.
The market expects the Fed to cut interest rates at its September 18 meeting but appears evenly split over whether the cut will be a modest 25 basis points or on the more robust side at 50 basis points, according to the CME FedWatch Tool.
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