By Ashitha Shivaprasad
(Reuters) – Gold prices scaled a one-week high on Monday after military conflict between Israeli forces and Palestinian Islamist group Hamas raised political unrest in the Middle East, bolstering the safe-haven appeal of the metal.
Israel’s troops were battling on Monday to clear out Hamas gunmen more than two days after they burst across the fence from Gaza on a deadly rampage.
Gold is considered a safe store of value amid political and economic turmoil.
Spot gold was up 1.1% at $1,853.20 per ounce by 0141 p.m. EDT (1741 GMT), its highest since Sept. 29.
U.S. gold futures settled 1% higher at $1,864.30.
There are a lot of questions about what could happen next in the Middle East, if the situation further escalates, then gold prices could move towards $1,900, said Bob Haberkorn, senior market strategist at RJO Futures.
Wall Street’s main indexes fell, while crude prices jumped more than 4% as the Middle East violence rattled markets. [.N][O/R]
Market focus is also on minutes from the Federal Reserve’s latest monetary policy meeting and the U.S. inflation data due later this week.
“We do not believe the FOMC will continue to hike rates into increased uncertainty, and the prospect for peak rates have suddenly moved closer despite the potential inflationary impact of higher oil prices,” Ole Hansen, head of commodity strategy at Saxo Bank, wrote in a note.
Traders are now pricing in an around 28% chance of another rate hike from the Fed this year, according to the CME Fedwatch tool.
Higher interest rates increase the opportunity cost of holding bullion.
Spot silver gained 1.2% to $21.86 per ounce. Platinum rose 1% to $885.81, while palladium slumped nearly 2% to $1,135.99.
“Platinum demand from fuel cell vehicles is expected to offset a portion of the demand lost as autocatalyst demand falls,” Heraeus analysts wrote in a note.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sherry Jacob-Phillips)