Gold closes: Tensions in the Middle East boost the appeal of safe-haven assets. Gold closes slightly higher, breaking through $2,000 for the first time since the beginning of the month.
Financial World 2023-10-21 05:13:01
According to news from the financial world on October 21, as the war between Israel and Hamas triggered concerns about the possible spread of violence in the Middle East, prompting investors to seek safety in gold, gold futures closed slightly higher, but have not closed since early August. Hitting highs above $2,000.
The price of December gold on the New York Mercantile Exchange rose $13.90, or 0.7%, to close at $1,994.40 an ounce, reaching as high as $2,009.20 during the session. Gold futures have not traded above $2,000 intraday since August 1 and have not settled above $2,000 since July 31, according to Dow Jones Market Data; the most active contract rose 2.7% this week %.
Fawad Razaqzada, market analyst at City Index and FOREX.com, said in market commentary: “In the past two weeks, gold has been mainly boosted by safe-haven funds due to geopolitical tensions in the Middle East.” He said that the U.S. Federal Reserve ( “Slightly dovish” comments from Federal Reserve Chairman Jerome Powell on Thursday also weighed on the dollar, further supporting metals and causing bond yields to fall. Lower bond yields and a weaker dollar could make dollar-denominated commodities more attractive to buyers than other assets.
The 10-year U.S. Treasury yield fell to 4.901% from 5.171% on Thursday. Thursday’s level was the third highest this year. On Thursday, Powell told the Economic Club of New York that inflation remains too high and “a few months of good data” are just the beginning of what is needed to bring inflation back to 2%. He also said the Fed was “watching” the tightening of financial conditions caused by the recent surge in long-term bond yields.
However, Razaqzada said there are still questions about the direction of bond yields. “It’s too early to say yields have peaked. If they just consolidate around current levels, that’s still a huge opportunity cost for holding an asset like gold that doesn’t pay any interest or dividends,” he said. , the precious metal “could also fall again amid an easing of tensions in the Middle East,” adding that “a potential trigger for such a reversal could be a possible ceasefire between Israel and Hamas.”
“It won’t take much to get gold prices back down, but for now, the price action tells us that there is strong bullish momentum behind the rebound,” Razaqzada said. “As traders, we have to respect that and, where possible, Look for bearish trades before waiting for a key reversal pattern.”
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2023-10-20 21:13:01
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