Gold hits five-month high on geopolitical risks
Gold prices (XAU/USD) climbed to over five-month highs, reaching near $3,425 during Asian trading hours on Friday.
Rising geopolitical tensions in the Middle East and rising bets on Federal Reserve (Fed) rate cuts provide some support to the precious metal, News.Az reports, citing foreign media.
Israeli Defense Minister Israel Katz said late Thursday that there had been a “preemptive strike against Iran” and declared a state of emergency as the country prepared for retaliation.
Israel's Prime Minister Benjamin Netanyahu stated early Friday that Israel’s goal is to remove the nuclear threat in Iran as failure to do so could spark a scramble by other countries in the Middle East to obtain nuclear weapons, per CNN. Netanyahu added that the operation will continue for as many days as it takes.
"Gold is up for the second straight day, largely on heightened geopolitical risks. If gold clears $3,400 again, minor hurdles at $3,417 and $3,431 remain — but a breakout to new all-time highs looks likely ultimately," said Peter Grant, vice president and senior metals strategist at Zanier Metals.
Softer-than-expected US Producer Price Index (PPI) inflation data released on Thursday have lifted the prospect for a rate cut from the US Federal Reserve (Fed). This, in turn, weighs on the Greenback and supports the USD-denominated commodity price.
Traders now expect a 25 basis points (bps) rate cut by September, with another such move likely in October. Before Thursday's PPI data, traders projected the Fed to wait until December to deliver a second rate cut.
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