October 13 (Reuters) – Gold prices jumped more than three percent on Friday and were on track for their best week in seven months, as the raging conflict in the Middle East prompted investors to flock to safe-haven assets.
Zero-yielding bullion got an additional boost from expectations that US interest rates may have peaked.
By 0309 PM EST (1908 GMT), the spot price of gold rose 3.2% to $1,928.15 per ounce. The settlement price in US gold futures contracts rose 3.1 percent to $1,941.50. Prices rose by 5.2% during the week.
Investors continued to follow developments in the conflict in the Middle East, which has worried the markets since the beginning of the week.
Israel said that its infantry and tank forces carried out raids inside the Gaza Strip, which was its first announcement of a shift from air war to ground operations to eliminate Hamas fighters a week after their bloody attack in southern Israel.
This has led to increased flows into safe-haven assets such as gold.
“Investors are fleeing to safe havens as the risks of tensions in the Middle East grow,” said Edward Moya, senior market analyst at OANDA.
“If the geopolitical situation becomes bleaker, there is a good chance that gold prices will rise to $2,000 levels this year. We have come from the mid-$1,800s to the mid-$1,900s, and the $2,000s are just a small fraction of that.”
U.S. consumer prices rose in September amid higher rental and gasoline costs, but core inflation is slowing, data showed Thursday.
Aside from the conflict, “despite yesterday’s (US) inflation report which was warmer than expected, there are currently expectations that the Fed will not raise interest rates at the November meeting, which also helps (gold) prices,” he said. David Major. Director of Metals Trading at High Ridge Futures.
Traders currently see about a 69% chance the Fed will leave interest rates unchanged this year, according to the CME Fedwatch tool.
Silver rose in spot transactions by 4% to $22.72 per ounce, heading for its first weekly gain in three weeks.
Platinum rose 1.4 percent to $880.42, while palladium fell 0.3 percent to $1,141.24 and is heading toward a weekly decline.
(Reporting by Ashitha Shivaprasad in Bengaluru; Preparing by Gabriel for the Arabic Bulletin) Editing by Alexander Smith and Sherry Jacob Phillips
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