Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold surged 1.7% to close above $1,968 as the escalating conflict between Hamas and Israel continued to drive investors into safe havens. It was the metal’s highest finish in a month.

An explosion at a Gaza City hospital killed approximately 500 people yesterday, deepening the turmoil in the region. With both sides blaming the other, President arrived in Israel today at once to pledge solidarity Israel and counsel against a full-scale occupation of Gaza.

Although US intelligence has reportedly determined that the explosion was the result of an errant Hamas missile, Iran announced a day of “unprecedented anger,” vowing a “harsh response” and calling for an embargo on selling oil to Israel. Jordan cancelled a proposed meeting with Biden.

US benchmark WTI crude jumped another 1.8% to more than $88 per barrel on the risk of further reductions in global supply. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

Meanwhile, US housing starts rebounded sharply in September, rising 7% after dropping 1.5% in August. Coming a day after retail sales data came in hotter than expected, the upbeat housing print suggests an economy with solid underlying momentum despite high borrowing costs.

Capping gold’s rise, benchmark 10-year Treasury yields rose to a fresh 16-year high above 4.9% after the solid data raised speculation that the Fed might not be done raising interest rates after all. The dollar tracking higher with yields, adding 0.3%.

While Fed fund futures trading posits a 99% likelihood of no hike in November, the odds of a December increase rose to 41% from just 26% a week ago.

Higher yields are a headwind for gold because they increase the opportunity costs for holding it instead of bonds. A stronger dollar makes it more expensive in other currencies.

The other precious metals were mixed, with silver adding 0.3% while platinum and palladium lost 1.3% and 1.1%, respectively.

At the Comex close: December gold jumped $32.60 to $1,968.30; December silver added 8 cents, to $23.01; January platinum dropped $11.90 to $894.30; and December palladium shed $12.70 to $1,134 an ounce.