Gold prices are on the rise, with the precious metal inching closer to the $1,850 mark during the Asian trading session on Monday. The driving force behind this ascent is a surge in risk aversion linked to the ongoing Palestine-Israel military conflict.
The escalating military conflict in the Middle East, pitting Hamas against Israel, is closely monitored by global markets. The concern is that the conflict could escalate further and potentially spread to other parts of the region, introducing geopolitical uncertainties that may have far-reaching consequences for global markets.
The possibility of increased violence in the Middle East is prompting investors to seek refuge in traditional safe-haven assets, with gold emerging as a prominent choice. During times of heightened geopolitical uncertainty, demand for safe-haven assets tends to surge, and gold, often considered a store of value, is benefiting from this trend.
Meanwhile, the US Dollar Index (DXY) has bounced back following three consecutive days of losses, currently trading around 106.20. The strength in the US Dollar (USD) can be attributed to the impressive US Nonfarm Payrolls data released last Friday.
The September jobs report revealed a substantial increase of 336,000 jobs, surpassing market expectations of 170,000. The revised figure for August stood at 227,000. However, US Average Hourly Earnings (MoM) remained steady at 0.2% in September, falling short of the expected 0.3%. On an annual basis, the report indicated a 4.2% decline, below the anticipated 4.3% figure.
Furthermore, US Treasury yields have rebounded, driven by expectations that the Federal Reserve (Fed) will maintain higher interest rates for an extended period. As of now, the 10-year US Treasury bond yield has once again reached 4.80%, nearing its peak since 2007.
Investor attention is likely to be directed towards the upcoming International Monetary Fund (IMF) meeting, where discussions will revolve around strategies for stabilizing international exchange rates and fostering development.
Additionally, market watchers will closely track the US Core Producer Price Index later in the week, as it plays a pivotal role in assessing inflationary trends and economic conditions within the United States. The evolving geopolitical landscape and economic data will continue to shape the trajectory of both gold and the US dollar in the days ahead.