Gold jumped to its highest level since the beginning of August on Wednesday as the escalating conflict in the Middle East sent investors flocking towards the safe-haven metal.
Spot gold was up 1.1% to $1,945.20 per ounce by noon EDT, having risen to as high as $1,962.35 an ounce earlier. US gold futures also gained 1.1%, trading at $1,957.00 per ounce.
Bullion has been on the rise since Hamas’ surprise attack on Israel earlier this month, up more than 5% over that period. Previously, it was trading near a seven-month low, with a steep selloff in Treasuries weighing heavily on the metal.
The latest surge comes a day after the bombing of a Gaza hospital that left about 500 Palestinians dead. Even before the explosion, officials in the region were increasingly worried they wouldn’t be able to keep the conflict from spreading should Israel go ahead with a ground invasion.
“Elevated risks in the Middle East are prompting safe-haven demand for gold, the technical also has improved. I think gold will push above $2,000 in the near term,” Jim Wyckoff, senior analyst at Kitco Metals, told Reuters.
“Gold will pull back if the Middle East situation simmers down, but right now the market place is expecting a further escalation,” Wyckoff added.
However, Fawad Razaqzada, market analyst at City Index, warned that with the dollar maintaining its bullish trend and bond yields on the rise again, it is not going to take much to slam gold back down.
Ole Hansen, head of commodity strategy at Saxo Bank, highlighted in a note that asset managers, many of which trade gold through exchange-traded funds (ETFs), continue to focus on US economic strength, rising bond yields and potentially another delay in peak rates.
Total holdings in bullion-backed ETFs continue to decline, and the paper market is still in sell mode, added Hansen.
Market focus is also placed on Federal Reserve Chair Jerome Powell’s speech on Thursday, which could offer some clarity on the Fed’s interest rate path after recent dovish comments from several US policymakers.
Source: Norvanreports