Gold has started a new trading week trading close to $2,000 an ounce with safe haven demand still high as Israel begins to mount its ground invasion of Gaza.
This week is filled with central bank announcements with tomorrow bringing the Bank of Japan’s rate decision followed by the Federal Reserve on Wednesday and the Bank of England on Thursday. While all three central banks are expected to leave their interest rates unchanged, the continued reminder of their hawkish stance is likely to keep a lid on a gold price that is already at a very high level historically.
The huge increase in geopolitical tensions ever since Hamas killed Israeli citizens and the subsequent aggressive response by Israel will keep demand for safe haven assets, principally gold, supported for the foreseeable future with no quick end to the conflict in sight.
This safe haven demand is set against a macroeconomic climate that would otherwise be bearish for gold with interest rates set to remain higher for longer. As such, the next few weeks could see gold trade within a narrow range either side of $2,000 an ounce, depending on how the situation in Gaza unfolds.
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