(Bloomberg) — Gold resumed its blistering rally as heightened tensions in the Middle East offset concerns that the Federal Reserve will cut interest rates less than expected this year.
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The US and its allies believe major missile or drone strikes by Iran or its proxies against military and government targets in Israel are imminent, in what would mark a significant widening of the six-month-old conflict, according to people familiar with the intelligence. Bullion tends to benefit during times of heightened geopolitical risk as investors seek out safety assets.
Gold fell the most in almost a month on Wednesday, after a hotter-than-expected US inflation readout led traders to reduce their expectations for rate cuts this year. The yield on 10-year Treasuries jumped to above 4.5% following the report, which is typically negative for non-interest paying precious metals.
Still, prices remain just shy of a record high reached on Tuesday, underpinned by strong buying by central banks. Bullion’s near-20% rally since mid-February is expected to fuel more gains, according to macro fund managers interviewed by Bloomberg, who see continued momentum in the market.
Spot gold rose 0.3% to $2,341.58 an ounce at 9:54 a.m. in Singapore. The Bloomberg Dollar Spot Index was little changed near its highest since November. Silver was steady after rising to a three-year high. Platinum and palladium advanced.
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