Gold prices extended their gains on Thursday after rising more than 2% in premarket trading as lingering tensions between the United States and Iran prompted a flight to safety and investors assessed the Federal Reserve’s monetary policy path.
Spot gold rose 0.7% to $5,012.83 an ounce by 0634 GMT. US gold futures for April delivery rose 0.4% to $5,031.20.
“Geopolitical concerns are at the forefront with reports that if the US takes military action against Iran, it could last several weeks,” said Jamie Dutta, market analyst at Nemo Money.
There was some progress in Iran talks in Geneva this week, but there was still distance on some issues, the White House announced Wednesday.
The Fed is very united.
Senior US national security advisers gathered in the White House Situation Room on Wednesday to discuss the Iran issue and were told that all US troops in the region should be in place by mid-March.
On the other hand, the minutes of January’s meeting showed that while the Fed was almost unanimous in keeping interest rates on hold, opinions were divided on future policy, with “several” being willing to raise interest rates if inflation remained high, while others were more likely to support further rate cuts if inflation subsided.
Weekly jobless claims later in the day and Friday’s personal consumption spending report, the Fed’s preferred measure of inflation, will provide further clues about the Fed’s policy path.
The market currently expects the first rate cut of the year to occur in June, according to CME’s FedWatch tool.
Non-yielding bullion tends to do well in low interest rate environments.
Spot silver rose 2.7% to $79.24 an ounce after rising more than 5% on Wednesday.
Silver is “supported by tight supply and low COMEX inventory levels ahead of the March delivery period. However, given the extent of the historic correction earlier this month, silver will not return to a safe position until it trades above $86,” said Ole Hansen, Head of Commodity Strategy at Saxo Bank.
Spot platinum rose 1.4% to $2,100.45 an ounce and palladium rose 1% to $1,733.45.
