Gold rises to one-week high on safe haven demand; silver surges 1.4%

Gold prices climbed to a one-week high on Monday, boosted by safe-haven demand as traders anticipated U.S. inflation data expected later this week, which could provide further insight into the Federal Reserve's potential interest rate cuts.

As of 1350 GMT, spot gold increased by 0.9% to $2,453.77 per ounce, while U.S. gold futures rose by 0.8% to $2,493.90.

“Gold prices surged, gaining over $12 in Comex to reach $2,442 and rising ₹270 in MCX to ₹70,165. The strength in gold is largely driven by escalating Middle East tensions, particularly concerns over a potential attack by Iran on Israel. Geopolitical uncertainties often bolster gold as a safe-haven asset, providing support during such volatile times. In the near term, gold prices are expected to remain in a positive range, with support at ₹69,500 and resistance around ₹70,650. Additionally, the upcoming U.S. CPI data will likely contribute to heightened volatility, as concerns over rising unemployment have increased the likelihood of a rate cut in September,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

What's weighing on gold prices?

Russia began evacuating civilians from a second region near Ukraine following an increase in military activity by Kyiv near the border.

On Sunday, the Palestinian militant group Hamas requested mediators to propose a plan based on previous discussions rather than initiating new negotiations for a Gaza ceasefire agreement.

Investors are eagerly anticipating the U.S. producer price data on Tuesday and the consumer price figures on Wednesday for further insight into inflation trends.

On Saturday, Fed Governor Michelle Bowman, typically known for her hawkish stance, slightly moderated her tone by acknowledging some "welcome" progress on inflation over the past few months.

According to the CME Group's FedWatch tool, markets are currently pricing in a 49% probability of a 50 basis point rate cut by the Fed in September.

“Gold and silver exhibited mixed performance in international markets, influenced by varied global signals, a steady dollar index, and stable U.S. bond yields. Despite a decline in U.S. jobless claims and a rebound in global equities, safe-haven demand for precious metals was bolstered by profit-taking in the Japanese Yen and rising tensions in the Middle East, particularly Iran's threat of retaliation against Israel. Gold and silver remain underpinned by key levels amid volatile currency markets and the possibility of U.S. Fed rate cuts to mitigate recession risks. Gold finds support at $2,405-$2,388, with resistance at $2,442-$2,458. Silver is supported at $27.05-$26.85, with resistance at $27.55-$27.82,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

Spot silver increased by 1.4%, reaching $27.82 per ounce, while platinum gained 2.4%, rising to $944.60, and palladium climbed 2.2% to $924.75.