Gold extends gains despite central bank inflation concerns and tensions in the Middle East
Today's market analysis on behalf of Samer Hasn, Senior Market Analyst at XS.com
September 19, 2024 (Investorideas.com Newswire) Gold resumes gain today after yesterday's correction after touching a record high of $2,600 per ounce in spot prices.
Even with yesterday's correction and profit-taking, open interest in COMEX gold futures, which touched $2,627 per ounce, rose again to 437K, which is close to the highest level in more than two years and may reflect investors' push for higher prices.
Gold's renewed gains come despite caution from central banks about the future path of inflation. The return of geopolitical concerns in the Middle East with warnings of a possible flare-up in the southern Lebanese front is also preserving the safe haven's luster.
After the Federal Reserve cut interest rates by half a percentage point yesterday, the central banks of England, Norway and Taiwan kept rates unchanged, while the Brazilian central bank raised rates. The common factor in these banks' decisions seems to be concerns about the upside risks to inflation despite expectations that it will continue to decline.
The return of geopolitical tensions to the forefront could also keep gold's shine or even push it to more historic peaks quickly. The US Department of Defense has warned of Israel's intention to open a front in southern Lebanon with the increasing military buildup, and US Defense Secretary Lloyd Austin has told Pentagon officials that Israel may attack soon, according to The Wall Street Journal.
The outbreak of war in southern Lebanon could exacerbate concerns about a broader regional war on multiple fronts that could directly drag the United States into it. This also comes as the negotiating track for a ceasefire in Gaza has stalled and no breakthrough has been achieved in previous rounds.
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