Gold prices held above the $4,000 level on Thursday (October 9th), as investors assessed the Israel-Hamas ceasefire agreement, while broader geopolitical and economic uncertainty and expectations of a US interest rate cut maintained bullish sentiment for the precious metal.

Spot gold was steady at $4,035.70 per ounce, as of 08:32 GMT. US gold futures for December delivery fell 0.4% to $4,055.20. Bullion broke through the $4,000 per ounce level for the first time on Wednesday, hitting a record high of $4,059.05.

Silver also followed gold's rally, rising 0.7% to $49.21 per ounce, after hitting an all-time high of $49.57 on Wednesday. "Gold's rally faces headwinds as a diplomatic breakthrough on Gaza eases risk aversion, while the ongoing recovery in the US dollar weakens bullion, leaving it vulnerable to a decline," said Nikos Tzabouras, Senior Market Analyst at Tradu.

"However, the bullish bias remains intact, and the path to new record highs remains wide open." US President Donald Trump announced that a ceasefire and hostage settlement agreement had been reached between Israel and Hamas as part of the first phase of his plan to end the war in Gaza that has killed more than 67,000 people and reshaped the Middle East.

The US dollar index rose 0.1%, near a two-month high, making dollar-priced bullion more expensive for foreign buyers.

Geopolitical risks, including the Middle East crisis and the war in Ukraine, along with strong gold buying by central banks, ETF inflows, expectations of a US interest rate cut, and economic uncertainty stemming from tariffs, have all contributed to gold's rally. The yellow metal has rallied more than 53% year-to-date and is on track for its biggest annual gain since the 1979 oil crisis.

Meanwhile, Federal Reserve officials agreed that risks to the US labor market are high enough to warrant a rate cut, but remain cautious amid stubborn inflation, according to minutes of its September 16-17 meeting released on Wednesday.

The market is currently pricing in a 25 basis point rate cut in October and December, respectively. "The ongoing US government shutdown has injected momentum into the (gold) trade, alongside rising fiscal concerns in Japan and France amid recent political leadership changes," UBS said in a note.

Non-yielding gold thrives in a low-interest rate environment and during times of economic and geopolitical uncertainty. "If risk sentiment continues to improve, this could drag gold prices lower in the near term as investors return to riskier assets," said Lukman Otunuga, senior research analyst at FXTM.

Silver has gained more than 70% this year, benefiting from the same factors that fueled gold's rally, as well as tight spot markets. Elsewhere, platinum fell 0.2% to $1,660.55, and palladium rose 0.7% to $1,460.14, reaching its highest level in more than two years. (alg)

Source: Reuters.com