Gold Prices Rebound as Investors Monitor Middle East Tensions and US Jobs Data
Gold prices climbed nearly 1% on Thursday as investors assessed developments in the Middle East and awaited key U.S. labor market data that could provide fresh insight into the Federal Reserve’s future interest rate decisions.
Spot gold rose 0.9% to $4,476.07 per ounce, while U.S. gold futures advanced 0.8% to $4,502.84 per ounce. The gains followed a sharp decline in the previous session, when the precious metal fell more than 1% due to strength in the U.S. dollar.
Ceasefire Agreement Offers Relief to Inflation Concerns
Investor sentiment improved after Washington announced that Israel and Lebanon had agreed to a ceasefire framework. However, the arrangement remains dependent on Hezbollah ending military operations, leaving uncertainty over its long-term effectiveness.
Despite the diplomatic progress, tensions across the Middle East remained elevated. Reports emerged of Iranian missile attacks targeting Kuwait and Bahrain, while U.S. forces conducted strikes on Iran’s Qeshm Island near the strategic Strait of Hormuz.
Meanwhile, Israeli military operations continued in southern Lebanon, with forces targeting areas controlled by Hezbollah.
Oil Prices Pull Back After Recent Rally
Oil prices moved lower during Asian trading hours after recording gains for three consecutive sessions. The decline helped ease immediate concerns that rising energy costs could further fuel global inflation.
Lower oil prices often reduce inflationary pressures, a factor that can support demand for precious metals such as gold.
Markets Await Critical US Nonfarm Payrolls Report
Attention is now focused on Friday’s highly anticipated U.S. nonfarm payrolls report, which could play a major role in shaping expectations for Federal Reserve policy.
Earlier this week, payroll processor ADP reported that U.S. private-sector employers added 122,000 jobs in May. The figure exceeded market forecasts and represented an improvement compared to the previous month, highlighting continued resilience in the labor market.
Inflation Data Supports Higher-for-Longer Rate Expectations
Additional economic data released on Wednesday showed that the ISM services sector prices-paid index climbed to its highest level since 2022.
The increase was largely driven by rising costs for petroleum products and other commodities, reinforcing concerns that inflation remains persistent.
As a result, investors have increasingly priced in the possibility that the Federal Reserve could maintain elevated interest rates for a longer period. Higher interest rates generally create headwinds for non-yielding assets such as gold.
US Dollar Retreats Slightly From Two-Month High
The U.S. Dollar Index slipped 0.1% after reaching its highest level in approximately two months during the previous trading session.
A weaker dollar tends to make gold more attractive to international buyers, providing additional support for bullion prices.
Silver and Platinum Also Advance
Other precious metals also posted gains alongside gold.
Silver rose 0.9% to $73.41 per ounce, while platinum climbed 1.3% to $1,884.60 per ounce, reflecting broader strength across the precious metals sector.
Copper Prices Decline on Growth Concerns
Copper prices moved lower as investors weighed concerns about slowing global economic growth and persistent inflation pressures.
London Metal Exchange copper futures slipped 0.4% to $13,745.33 per ton, while U.S. copper futures declined 0.6% to $6.44 per pound.
According to analysts at ING, investor sentiment remains affected by concerns over weaker economic growth, elevated energy prices, and inflation risks. They also noted that recent profit-taking followed a strong rally driven by expectations of tighter copper supplies and potential U.S. import tariffs.
