Creamer Media Login

Gold hits $2 000 as Israel-Hamas clash raises safe-haven allure

28th October 2023

Font size: - +

Gold rose to $2 000 an ounce for the first time since May as concerns over conflict in the Middle East outweigh the impact of high bond yields.

Israeli forces are expanding their activity in the Gaza Strip, a defense spokesman said, as Gaza lost Internet and phone service and Israel stepped up airstrikes in the area.

The precious metal has jumped about 9% since Hamas attacked Israel on October 7, bouncing back from a seven-month low as demand for haven assets increased. The initial surge was intensified as many investors betting on a further slide were caught off guard by the outbreak of war, forcing them to quickly cover their shorts.

Gold’s recent bounce leaves the metal increasingly disconnected from one of its traditional trading dynamics: with inflation-adjusted Treasury yields at the highest in over a decade, non-interest-bearing bullion should typically come under massive selling pressure. Yet the relationship has appeared to unravel over the past year, as a combination of central-bank demand and haven buying kept prices elevated — and reasonably range-bound — for months, even as real interest rates spiked.

That trend had finally shown signs of turning around in the weeks preceding the Hamas attack on Israel, when indications from Fed policymakers that they would keep policy tight for a long period helped trigger a sharp sell off in bullion prices.

The threat of the conflict spilling over into the wider region that’s crucial to the global energy supply has rattled markets. A spike in oil prices could generate inflation that’s difficult for central banks to curb without hurting their economies, potentially boosting gold.

Edited by Bloomberg

Comments

The content you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

Click Here

MAGAZINE & ONLINE

➕

RESEARCH CHANNEL AFRICA

➕

CORPORATE PACKAGES

CLICK FOR A QUOTATION

➕