Gold gains for second consecutive week as Middle-East tension intensifies
Middle East, which has created significant uncertainty in financial markets. The week began with a slight dip in COMEX gold prices, but a remarkable one-sided rally ensued.
The escalation of the Israel-Hamas conflict heightened the demand for safe-haven assets, and gold benefitted from this surge in demand.
Interestingly, this increase in gold prices occurred even as US 10-year treasury yields rose to 5%, primarily due to robust economic data in the United States. The Middle East conflict escalated with drone attacks on US bases in Iraq and Syria, and an American destroyer intercepted cruise missiles aimed at Israel by Houthi rebels in Yemen.
These events raised concerns about the potential for the conflict to escalate into a broader US-Iran confrontation. Additionally, Israel's buildup of troops along the Gaza border heightened tensions in the region.
In terms of economic data, US retail sales advanced by 0.7% in September 2023, following an upwardly revised 0.8% increase in August.
US manufacturing production rose by 0.4%, and industrial production increased by 0.3% in September, surpassing expectations. Weekly jobless data showed a decline in the number of Americans filing for unemployment benefits, reaching the lowest point since January at 198,000.
However, US existing home sales hit a 13-year low due to soaring mortgage rates, which deterred homeowners from selling their properties.
Notably, the robust economic data pushed the yield on US 10-year notes to a 16-year high of 5.001%. Federal Reserve Chair Jerome Powell indicated the central bank's intention to maintain current interest rates at its next meeting, while keeping the possibility of future rate hikes open in the event of continued strong economic
