Lingering Middle East tensions and upcoming US PCE figures set to test investors nerves next week
The escalation of the Israel-Iran conflict and repricing of Federal Reserve interest rate cut expectations kept traders on edge this week. The Dollar held above 106 levels as stronger than expected US retail sales and hawkish comments from Fed officials reinforced bets that the Fed will wait longer before starting to cut interest rates.
Federal Reserve Bank of Cleveland President Loretta Mester believes the Fed can hold interest rates steady, while Atlanta’s Raphael Bostic reiterated that it will be appropriate to lower borrowing costs toward the end of the year. Minneapolis Fed counterpart Neel Kashkari said the central bank needs to achieve more confidence that inflation is declining before cutting interest rates and could possibly delay such a move until after 2024.
COMEX Gold prices witnessed the fifth consecutive weekly gain and traded well above $2400 per troy ounce aided by geopolitical risks, robust Chinese demand, and a sharp rise in speculative buying. Silver also closed the week with a 1.6 percent weekly advance driven by a bullish demand outlook from the Silver Institute.
WTI Crude oil surged to $86.3 a barrel on Friday after unverified reports of explosions in Iran, Syria, and Iraq but closed the week 3 percent lower at $83.5 a barrel. Risks of a wider regional conflict run high as Israel had struck targets in Iran in response to an unprecedented missile and drone attack last weekend.
With upcoming US PCE figures and ongoing tensions in the Middle East, investors are bracing for a volatile week ahead. Stay tuned for more updates on how these factors will impact the market.