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Gold futures surged on Friday, marking a fifth consecutive weekly rise, signaling the metal’s unwavering strength amidst escalating tensions in the Middle East. This remarkable streak of success is the longest seen since January 2023. Notably, this surge occurred despite the dollar and bond yields showing an upward trend, while expectations of rate cuts in 2024 have diminished.
“With the landscape shifting in such unprecedented ways, it is clear that the usual reactions have been thrown out the window when it comes to gold,” remarked Ole Hansen from Saxo Bank.
A substantial 16% year-to-date surge in gold prices has been primarily attributed to a confluence of factors by Hansen. These include mounting geopolitical risks associated with the Middle East tensions and the conflict in Ukraine, robust retail demand in China, increased central bank acquisitions, soaring debt-to-GDP ratios in major economies, and the looming specter of inflation resurgence.
Front-month Comex gold (XAUUSD:CUR) for April delivery concluded the week with a notable +1.8% increase at $2,398.40 per ounce, with Friday contributing a 0.7% rise. Additionally, front-month April Comex silver (XAGUSD:CUR) recorded a +1.9% growth to reach $28.808 per ounce, closing the week with a 1.7% gain on Friday.
“The fluctuating situation in the Middle East has captured the attention of global markets,” noted David Meger of High Ridge Futures. Meger suggested that while gold might retreat if the situation somehow de-escalates, the overarching bullish trend in gold is anticipated to persist due to the potential delay in Federal Reserve rate cuts compared to market expectations.
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