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Gold surpasses $2,000 mark with Israel-Hamas war, Fed meeting in focus.



Gold prices traded around the key $2,000 level on Monday, as investors positioned cautiously ahead of the U.S. Federal Reserve’s policy meeting this week and safe-haven demand due to the Middle East conflict provided a floor.


Spot gold was up 0.3% at $2,003.40 per ounce. U.S. gold futures slid 0.6% to $1,993.56.


Spot gold prices surpassed the closely watched, psychological $2,000 level for the first time since mid-May, as investors piled into safe-haven bullion.


Gold shot up on Friday on “the brink of a major geopolitical event... but I think (the) market has digested (that) the ground invasion (by Israel) of Gaza will continue and because of that we’ve seen some bit of profit-taking today,” said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.


Palestinians in Gaza reported fierce air and artillery strikes early on Monday as Israeli troops backed by tanks pressed into the enclave with a ground assault.


Market participants now look towards the U.S. central bank’s policy decision due on Wednesday. While the Fed is widely expected to keep interest rates unchanged, the focus will be on Chair Jerome Powell’s commentary.


“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,” City Index senior analyst Matt Simpson said.


Inflation pressures will dog the world economy next year, a Reuters poll showed, suggesting interest rates will also remain higher for longer.


Although gold is seen as a hedge against inflation, higher interest rates dull non-yielding bullion’s appeal.


Source: CNBC

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