Gold edges higher as US-led airstrikes on Yemen aid haven demand
Gold edged higher as US-led airstrikes on Houthi rebel targets in Yemen boosted haven demand.
The military action against the Iran-backed group followed a string of attacks on vessels in the Red Sea. The strikes mark a significant escalation of fighting in the Middle East, which started with the Hamas attack on Israel in early October, and could push bullion higher if the conflict spreads.
The precious metal is still on track for a weekly loss, however, after US inflation came in faster-than-expected in December, which may delay the Federal Reserve’s pivot to lowering borrowing costs. Swaps markets are pricing in a lower chance of rate cuts by March, relative to the end of last year. Higher borrowing costs are typically negative for gold, which doesn’t offer any interest.
“A further uptick in geopolitical risk in the Middle East, plus a slow grind downwards in the US ten-year Treasury real yield below 1.82%, is likely to support a bullish tone in spot gold with a near-term resistance to watch at $2,060,” said Kelvin Wong, senior market analyst at Oanda Asia Pacific.
Spot gold is still well supported at the 50-day moving average that is acting as a key near-term support at $2 015, he added.
Gold rose 0.2% to $2,033.64 an ounce as of 12:12 p.m. in Singapore, to be down 0.6% for the week. The Bloomberg Dollar Spot Index was 0.1% lower. Silver, platinum and palladium all climbed.
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