Mideast conflict sets up safe-haven gold for best month in seven

By Ashitha Shivaprasad

(Reuters) – Gold eased on Tuesday but was set for its best month since March as the Israel-Hamas war sparked safe-haven flows, while focus shifted to this week’s U.S. central bank policy meeting.

Spot gold slipped 0.8% to $1,980.71 per ounce by 2:30 p.m. ET (1830 GMT) after spiking as high as $2,007.59 earlier in the session.

U.S. gold futures settled down 0.6% at $1,994.30.

Prices retreated on a combination of psychological resistance around $2,000 with some profit-taking ahead of key economic reports, said David Meger, director of metals trading at High Ridge Futures.

But, “we still have a positive bias in gold with the continuation of safe-have demand given the Middle East war.”

Bullion touched its lowest in seven months at $1,809.50 on Oct. 6, a day before Hamas’ attack on Israel. It is now on track for an over 7% rise this month after investors bolted for safety amid the ensuing crisis.

Market focus this week is also on the U.S. Treasury’s refunding announcement and the Federal Reserve’s monetary policy decision on Wednesday, followed by the U.S. monthly jobs report on Friday.

Markets are widely expecting the Fed to keep rates on hold at this meeting, according to the CME FedWatch tool.

“A stronger jobs market could positively impact yields and negatively impact gold, while a weaker jobs market raises the potential for a dovish Fed and then the pendulum would swing the other direction,” Meger added.

The World Gold Council said global gold demand excluding over-the-counter trading slipped 6% in the third quarter as central bank buying fell short of last year’s record levels and consumption by jewellers declined.

Spot silver dropped 2.4% to $22.75 per ounce while platinum rose 0.13% to $930.68, both set for monthly gains.

Palladium fell 0.5% to $1,122.60, on track for a nearly 10% decline this month.

(Reporting by Ashitha Shivaprasad, Sherin Elizabeth Varghese and Deep Vakil in Bengaluru; Editing by Mark Potter and Shailesh Kuber)