Gold futures surged on Thursday rising above $1,200 a troy ounce, as Saudi Arabia and Egypt initiated a ground campaign in Yemen aimed at subduing the advance of Shiite-led Houthi rebels.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery rose 7.20 or 0.60% to $1,204.20 a troy ounce. At one point on Thursday prices for gold futures soared to a daily-high of $1,218.00 an ounce – a level not reached since mid-February. Gold also traded at a low of 1,193.80 on a volatile day of trading.
Gold is viewed as a safe haven for investors when geopolitical risks heighten.
Gold futures remained steady in U.S. afternoon trading as Egyptian military officials told the Associated Press that Egypt and Saudi Arabia will launch a ground assault in Yemen once its determined that the Houthi rebels have been sufficiently weakened by a series of airstrikes that began on Wednesday evening.
Earlier on Thursday, officials from the Saudi Arabian government said they launched an operation nicknamed Decisive Storm “in order to defend legitimate government in Yemen and to prevent the Houthi militias from controlling the country by force.” Saudi Arabia launched a bombing campaign against the rebels inside Yemen, after an advance by the Houthi militants toward the city of Aden forced Yemen president Abed Rabbo Mansour Hadi to flee the port city on boat.
Gold had been in freefall since Mar. 6 when a better than expected U.S. jobs report fueled speculation that the Federal Reserve could raise interest rates from its current near zero level sooner than expected. Last week, gold futures plunged to a four-month low of 1,148.20 ahead of the Fed’s decision to remove its stance of remaining patient on the timing of a potential rate hike.
Gold struggles to compete with high yield bearing assets in periods of rising interest rates.
At the same time, relatively dovish comments from Fed chair Janet Yellen on slower long-term increases for inflation, interest rates and GDP spooked the markets and came as a surprise to many traders. As a result, the precious metal has undergone a furious rally over the last week.
Also on Thursday, Federal Reserve Bank of Atlanta president Dennis Lockhart told CNBC that he would wait until the middle of the year or perhaps even later before raising rates. Lockhart’s comments came after a mix of economic indicators were released this week that could cause the Fed to exercise greater caution. The U.S. Department of Labor said on Thursday that individuals filing for initial jobless benefits in the week ending Mar. 21 declined by 9,000 to 282,200. Analysts expected initial jobless claims to fall by 1,000 to 290,000 last week. One day earlier, however, U.S. durable goods orders dropped by 1.4% for the month of February, marking the sixth straight month that U.S. business investment spending had declined.
Elsewhere, silver futures for May delivery rose 0.098 or 0.58% to 17.098 a troy ounce.
Copper futures for May delivery edged up 0.018 or 0.65% to 2.810 a pound. Earlier this week, copper reached a three-month high at 2.945.