Gold jumped to the highest level in four weeks as the intensifying conflict in the Middle East bolstered haven demand, with hopes for a diplomatic resolution deteriorating after a deadly explosion in Gaza.
US President Joe Biden’s visit to Israel and Jordan scheduled for Wednesday began to unravel even before he left the ground, after the explosion at a Gaza hospital left hundreds dead and Arab leaders pulled out of a meeting planned for the trip.
The threat of escalation continues to provide support for bullion, which has gained about 6% since Hamas’ surprise attack on Israel earlier this month. Previously, the metal was trading near a seven-month low, with a steep selloff in Treasuries weighing heavily on the non-yielding asset.
Gold climbed even as data showed US retail sales exceeded all forecasts and industrial production strengthened last month. The figures reinforced the case for the Federal Reserve to keep interest rates higher for longer. Higher borrowing costs are typically negative for gold.
Any escalation should see safe haven buying remain strong, according to ANZ Banking Group Ltd. “This comes amid strong demand from the physical market, both from central banks as well as consumers in both India and China,” it said.
Spot gold climbed 0.9% to $1,939.75 an ounce as of 6:07 a.m. in London. The Bloomberg Dollar Spot Index was little changed. Silver was up 1.4%, while platinum and palladium also gained.
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