Gold extends gains, snaps highest close since August-end

Gold prices finished in the green today, Oct. 18, after touching the highest level since Sept. 1, as the intensifying conflict in the Middle East bolstered haven demand, with hopes for a diplomatic resolution deteriorating after a deadly explosion in Gaza.

Fed Governor Christopher Waller said “persistent upward pressure on inflation and stalling or even reversing progress toward 2%” could possibly show if demand and economic activity continue at their recent pace. He added that the Fed would put its gains on inflation and longer-run price stability at risk if it did nothing.

The yellow metal's gains came despite the rise in 10-year US Treasury bond yields to exceed 4.9% for the first time since 2007, after the release strong economic data that reinforced fears that the Us central bank would continue to tighten its monetary policy further for a longer period.

The CME FedWatch Tool indicated that the possibility of a 25-basis-point interest rate hike at the forthcoming Fed policy meeting in November decreased to 2.8%, compared to 34.1% a month ago. In addition, investors are pricing in a 97.2% chance that the Fed will hold steady to its current monetary policy.

At settlement today, gold futures for December delivery surged 1.7%, or $32.6, to $1,968.3 per ounce, marking the highest close since Aug. 30, after prices touched $1,975.8 an ounce in early trading.

Likewise, the US dollar index, which measures the performance of the US currency against a basket of six major currencies, increased 0.15% to 106.42 points at 08:44 pm Makkah time.