Gold gains 1% on MidEast risks, spotlight on Fed meet

By Ashitha Shivaprasad and Deep Kaushik Vakil

(Reuters) – Gold vaulted over $2,000 on its way to a third straight weekly gain on Friday, as an escalation in the Israel-Hamas conflict fuelled safe-haven buying, while investors awaited the U.S. Federal Reserve policy meeting due next week.

Spot gold jumped 1.2% to its highest since mid-May at $2,009.19 per ounce by 3:10 p.m. EDT (1910 GMT) and gained 1.4% for the week. U.S. gold futures settled 0.1% higher at $1,998.50.

Trading volumes spiked after Israel’s chief military spokesperson said its air and ground forces are stepping up operations in the Gaza Strip, amid reports of heavy bombing of the besieged enclave.

“No one wants to go home short over the weekend. You have no idea where gold could open Sunday evening if something really goes pear-shaped,” said Tai Wong, a New York-based independent metals trader.

Safe-haven bullion has gained around 8%, or more than $140, since the start of the war on Oct. 7.

“The bigger story here is about the prospect for additional safe haven buying activity, which will occur if there is an escalation in the Middle East,” said Daniel Ghali, commodity strategist at TD Securities.

Cooling inflation will likely keep the Federal Reserve on pause in coming months, traders bet ahead of the bank’s meeting next week, even as persistent underlying price pressures amid strong consumer spending kept some chance of a rate hike later this year in play.

“A close above $2000 may signal a move towards the two record closing highs of around $2050 from March 2022, and May this year,” Ole Hansen, Saxo Bank’s head of commodity strategy, wrote in a note.

In the physical market, purchases of gold during a major festival in India improved this week, while top consumer China saw premiums easing further. [GOL/AS]

Spot silver rose more than 1% to $23.09 per ounce, but was set for a weekly fall.

Platinum was flat at $900.53 and palladium lost 1.3% to $1,118.70, with both metals on track for weekly gains.

(Reporting by Ashitha Shivaprasad, Deep Vakil and Sherin Elizabeth Varghese in Bengaluru; Editing by David Holmes, Krishna Chandra Eluri and Shailesh Kuber)