Gold jumps as investors dash for safe havens after Middle East clashes
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Gold gained as much as 1.2 per cent in early Asian trading on Oct 9.
PHOTO: REUTERS
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Canberra – Gold prices climbed more than 1 per cent on Monday as dramatic clashes between Israeli and Hamas forces over the weekend raised the risk of a wider Middle East conflict and spurred a rush to safe-haven investments.
Israel pounded the Palestinian enclave of Gaza on Sunday, killing hundreds of people in retaliation for one of the bloodiest attacks in its history when Islamist group Hamas rampaged through Israeli towns on Saturday.
Spot gold jumped 1 per cent to US$1,849.90 an ounce by 3.53pm Singapore time, having hit its highest level in a week. US gold futures climbed 1.1 per cent to US$1,864.50.
“Gold has regained its safe-haven status following the geopolitical events over the weekend,” City Index senior analyst Matt Simpson said.
“We see the potential for gold to head for US$1,880, but unless we see bond yields move materially lower, I doubt it can break US$1,900 any time soon.”
The spiralling violence threatens to start a major new war in the Middle East, sending oil prices higher and boosting the demand for safe-haven assets like Treasuries, the United States dollar and the Japanese yen, along with gold.
Gold rebounded sharply from seven-month lows hit on Friday, but its upside remained capped by strong US economic data that has bolstered the view that the Federal Reserve is unlikely to end its monetary policy tightening cycle in the near term.
Higher US rates raise the opportunity cost of holding gold, which yields no interest.
Last week, data showed that US employment increased by the most in eight months in September, pointing to persistent labour market strength. A hot inflation print later in the week could pave the way for another US interest rate hike in 2023. REUTERS
