Gold prices have maintained stability near the crucial $2,000 level, driven by strong safe-haven demand amid an escalating Middle East conflict. Investors are also eagerly awaiting the outcome of the U.S. Federal Reserve’s policy meeting scheduled for this week.
As of 0245 GMT on Monday, spot gold was trading steadily at $2,003.17 per ounce. Additionally, U.S. gold futures saw a 0.7% increase, reaching $2,013.00.
The Middle East conflict saw Israeli air strikes hitting areas near Gaza City’s Shifa and Al-Quds hospitals early on Monday. Concurrently, Palestinian militants clashed with Israeli forces in a border area east of the city of Khan Younis in the south of the enclave, as reported by Palestinian media.
On Friday, gold prices surged to $2,009.29 per ounce, surpassing the psychologically significant $2,000 level. Investors flocked to safe-haven bullion due to concerns about a potential global economic fallout stemming from the Israel-Hamas conflict.
Market participants are now turning their attention to the U.S. central bank’s policy decision, which is set for Wednesday. While the Federal Reserve is widely expected to maintain unchanged interest rates, the focal point will be Federal Reserve Chair Jerome Powell’s commentary.
Matt Simpson, senior analyst at City Index, noted, “The spate of strong economic data means it will force the Fed to retain a hawkish undertone, despite raising concerns over the Middle East conflict. That should keep a floor under gold prices, which look quite comfortable above $2,000 at the start of the week.”
Additionally, the Commerce Department reported a surge in U.S. consumer spending in September. While monthly inflation remained warm, there is concern about persistent high inflation in the global economy next year. More than 75% of the over 200 economists polled by Reuters expressed the main risk as higher-than-forecasted inflation, implying that interest rates may remain higher for a longer duration.
Although gold is often considered a hedge against inflation, higher interest rates can diminish the appeal of non-yielding bullion. In other precious metal updates, spot silver remained at $23.15, platinum experienced a 0.3% decline to reach $901.35, and palladium saw a 0.2% increase, reaching $1,124.48.
