Gold/AUD Record High as U.S. Heads to Israel

The price of gold in AUD has just closed the day at a record high at the end of last week. Gold prices pushed higher on Friday, building on Thursday's gains as investors digested an inflation report that came in hotter than expected. In USD, the precious metal jumped 1.5% to near $2,650 per ounce, with bullish traders nudging closer to the record high of less than $2,700. The more recent uptick was mostly predicated on uncertainty after the release of September's inflation data.

The Consumer Price Index for September rose 2.4% on the year, a bit over the expected 2.3% increase. Inflation cooled down from 2.5% in the previous month, but the new fears of price pressures made investors advance to safe havens like gold. The U.S. dollar and treasury yields initially surged and later pulled back, further fuelling demand for the precious metal.

Events unfolding worldwide this year have driven gold to notable highs. Geopolitical tensions, mainly in the Middle East, have kept investors on their toes and prepared to increase their holdings of gold. This year has seemed like a continuous increase in military conflict. The bad news is that this escalation has shown no signs of stopping.

It appears that the United States is now preparing to deploy 'THAAD' anti-ballistic missile systems to Israel. The Pentagon confirmed that the systems would be deployed, and they also announced that roughly 100 U.S. troops would be devoted to manning them. Previously, the Pentagon sent U.S. troops into the general region in response to increasing tensions in Lebanon, but this is different. This means U.S. troops are now very directly involved in the battle with Israel, and this could be a pathway to the U.S. getting pulled into a conflict with Iran. Meanwhile, Iran has signalled that if things get worse, Israeli anti-air defence systems would not be off-limits either.

The theme of rapidly escalating military conflict may continue to be one of the large drivers supporting the gold price.