Gold surged to the highest level in almost two months Friday on haven demand after Israel’s attack on Iran which reportedly killed some senior officials in what has been termed a “major” attack.
Israel targeted Iran’s nuclear program and killed three of its security chiefs, according to initial reports. Iran announced on state television that it won’t participate further in nuclear negotiations with the United States after the attack, which the Israeli military said involved 200 warplanes.
The escalation in Middle East tensions caused both gold and oil to climb. Gold is a traditional hedge against geopolitical and economic uncertainty.
August gold futures rose 1.8% Thursday to settle at $3,402.40 an ounce on Comex, and the front-month contract gained 1.7% in the first four days of the week. Bullion slipped 0.1% last month after increasing 5.4% in April and gaining 11% in March. It’s up 29% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The August contract is currently up $58.60 (+1.72%) an ounce to $3461.00 and the DG spot price is $3443.40.
Israeli Prime Minister Benjamin Netanyahu said the strikes were a “targeted military operation to roll back the Iranian threat to Israel’s very survival.” U.S. Secretary of State Marco Rubio said the U.S. wasn’t involved in the strikes and didn’t provide any assistance, though President Donald Trump said on Fox News that he was informed before the strikes.
A number of Middle Eastern nations including Iran, Jordan, and Qatar have closed their airspace.
Separately, the standoff between state and federal authorities in Los Angeles continued, as protests against the federal government’s immigration raids spread beyond the city to other parts of the country. An appeals court temporarily blocked a judge’s ruling to return control of the National Guard to California.
In economic news, wholesale prices increased in May, in data out Thursday. The producer price index, a closely watched inflation measure, showed that they rose 0.1% month on month in May and at an annual rate of 2.6%. The monthly figure was lower than analysts had anticipated.
On Wednesday, the consumer price index data showed that inflation rose 2.4% in May from a year earlier, just above April’s 2.3% increase. So-called “core” inflation, which excludes volatile food and energy prices, came in at 2.8%, below analysts’ expectations.
Consumer sentiment data is scheduled for release Friday.
The Federal Reserve closely watches inflation and the labor market in determining interest rates.
Last month, the Fed left interest rates unchanged again at 4.25% to 4.50%. Most investors tracked by the CME FedWatch Tool expect the Fed to begin interest rate cuts in September, not the next two scheduled policy meetings, next week and in July. Lower interest rates are typically bullish for gold, making the yellow metal a more attractive alternate investment.
The Fed held rates at policymakers’ meetings this year after reducing them three times in 2024. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. Previously, the Fed had kept rates at 5.25% to 5.50% for a year.
Front-month silver futures edged up 3.4 cents Thursday to settle at $36.30 an ounce on Comex, though the July contract rose 0.4% in the first four days of the week. Silver added 0.6% in May after dropping 5.2% in April and advancing 9.9% in March. It gained 21% in 2024. The July contract is currently up $0.115 (+0.32%) an ounce to $36.410 and the DG spot price is $36.37.
Spot palladium fell 1.7% Thursday to $1,065.50 an ounce, though it’s up 0.2% so far this week. Palladium advanced 2.8% last month after falling 4.9% in April and rising 7.3% in March. Palladium dropped 17% last year. Currently, the DG spot price is down $2.40 an ounce to $1063.50.
Spot platinum rose 1.3% Thursday to $1,283.90 an ounce and is up 9.5% so far this week. It surged 8.6% in May after retreating 3.1% in April and increasing 6.7% in March. Platinum lost 8.4% in 2024. The DG spot price is currently down $45.50 an ounce to $1251.60.
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