Gold prices at 3-mth high on Middle East tensions, mixed Fed cues

investing.com:

Investing.com-- Gold prices rose to a three-month high on Friday amid persistent safe haven demand on concerns over the Israel-Hamas war, while somewhat mixed signals on U.S. interest rates also stalled a rally in the dollar and Treasury yields. 

The yellow metal was set for a second straight week of strong gains, with gold futures coming close to the $2,000 an ounce level as fears of a broader conflict in the Middle East fueled demand for traditional safe havens.

Gold was encouraged by some overnight weakness in the dollar and Treasury yields, as Federal Reserve Chair Jerome Powell said that the recent spike in yields was tightening financial conditions, potentially lessening the need for more action by the Fed.

While Powell still left the door open for at least one more hike this year, markets took his comments as a sign that the Fed was done with raising interest rates. This spurred some profit taking in thedollar, while yields also came off multi-year highs, although the 10-year rate still remained close to the 5% level. 

Still, softer yields and a weaker dollar helped push up gold prices, as did increased safe haven demand amid uncertainty over the Israel-Hamas war. Markets are watching for a planned ground assault on the Gaza strip by Israeli forces, which could mark an escalation in the conflict.

Spot gold rose 0.1% to $1,977.14 an ounce, while gold futures expiring in December rose 0.4% to $1,989.05 an ounce by 00:53 ET (04:53 GMT). Both instruments were up nearly 2.5% this week, after surging over 5% in the prior week. 

But with Powell still leaving the door open for more rate hikes, a rally in the yellow metal could be limited, especially if more economic indicators point to resilience in the U.S. economy and