Gold holds near $2 000 after Israel starts ground offensive

31 Oct, 2023 - 00:10 0 Views
Gold holds near $2 000 after Israel starts ground offensive Gold

eBusiness Weekly


Gold traded near $2 000 an ounce — after breaching the threshold for the first time since May on Friday — as Israel’s ground invasion of Gaza appeared to be more cautious than it had initially vowed.

Bullion edged lower after jumping 1.1% on Friday as Israel stepped up ground operations. Israel sent troops and tanks into the northern Gaza Strip in what it called the second and longer phase of its war against Hamas and is taking a day-by-day approach. That eased fears that a massive invasion would lead to a regional escalation.

“Oil and gold prices are notably lower in early Monday trade, but remember this is likely to be a long, drawn-out affair with many false dawns,” said Stephen Innes, managing partner at SPI Asset Management. “Hence, gold prices may not drift too far lower.”

The precious metal has stood out as one of the biggest winners since Hamas attacked Israel on October 7, rising more than 9% as demand for haven assets increased. It’s likely to continue benefiting should tensions increase, alongside the Swiss franc and short-dated US government bonds.

The conflict has taken over from the US interest-rate path and Treasury yields as the main price drivers for bullion. Still, rate decisions by major central banks — including the Federal Reserve — will be watched closely this week for the impact on borrowing costs.

Markets are also focused on the Treasury Department’s new borrowing plan, due hours ahead of the Fed’s interest-rate decision on Wednesday.

The announcement will reveal the extent to which the Treasury will ramp up sales of longer-term debt to fund a widening budget deficit, with the selloff so far sending yields surging to the highest levels since before the global financial crisis. Higher yields are typically negative for non-interest bearing bullion.

Spot gold declined 0.2% to $2 001.65 an ounce as of 12:55 p.m. in Singapore. The Bloomberg Dollar Spot Index was flat. Silver and palladium were stable, while platinum fell.

Share This:

Sponsored Links