(Bloomberg) -- Gold held an advance that put it close to an all-time high, with markets assessing the escalation of conflict in the Middle East as Israel pledged to retaliate against Iran’s missile strikes.
Bullion traded above $2,660 an ounce after closing 1.1% higher Tuesday as Iran launched about 200 ballistic missiles at Israel. President Benjamin Netanyahu called the move a “big mistake” and vowed to make Iran “pay for it.” The US is actively supporting preparations to defend Israel, according to an earlier report.
“The market does what it is supposed to do when news like that breaks,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “Gold was already suffering from buying fatigue, so the latest round of safe-haven buying needs to stick in order to avoid selling from wrong-footed” funds with bullish bets on gold, he said.
Gold has rallied nearly 30% this year, hitting a series of record highs in the process. Recent gains have been fueled by anticipation for interest rate easing by the Federal Reserve, which last month kicked off its cutting cycle with a 50-basis-point move.
Traders also were weighing the interest rate outlook. Swaps traders are wagering on a one-in-three chance the Fed will deliver another half-point cut in November, but that may not pan out as expected, BlackRock Inc. Chief Executive Officer Larry Fink warned in an interview with Bloomberg Television.
Along with any further escalation of conflicts in the Middle East, traders also will be looking to Friday’s US jobs report for September, which may prove to be pivotal in offering insights on the Fed’s pace of rate cuts.
Spot gold was flat at $2,662.78 an ounce as of 6:40 a.m. in Singapore, below its all-time high of $2,685.58 reached last week. The Bloomberg Dollar Spot Index edged 0.1% lower. Silver dipped and platinum was little changed.
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